SAP SE provides application and analytics software and software-related services for enterprises worldwide. The company offers solutions covering various lines of businesses, including asset management, commerce, finance, human resources, manufacturing, marketing, sales, service, sourcing and procurement, supply chain, and sustainability, as well as research and development, and engineering. The company was founded in 1972 and is based in Walldorf, Germany.
SAP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Sap Se with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Sap Se ranked in the 11th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. In terms of the factors that were most noteworthy in this DCF analysis for SAP, they are:
The compound growth rate in the free cash flow of Sap Se over the past 4.95 years is 0%; that's better than merely 21% of cash flow producing equities in the Technology sector, where it is classified.
The business' balance sheet suggests that 11% of the company's capital is sourced from debt; this is greater than only 23.6% of the free cash flow producing stocks we're observing.
Sap Se's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -21.96. This coverage rate is greater than that of only 5.32% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
SIMO, GRUB, GSKY, HPE, and IIVI can be thought of as valuation peers to SAP, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
SAP users should immediately deploy a newly released patch for a critical vulnerability that could allow hackers to compromise their systems and the data they contain. The flaw is in a core component that exists by default in most SAP deployments and can be exploited remotely without the need of a username and password. Researchers from security firm Onapsis who found and reported the vulnerability estimate that 40,000 SAP customers worldwide might be affected. Over 2,500 vulnerable SAP systems are directly exposed to the internet and are at higher risk of being hacked, but attackers who gain access to local networks can compromise other deployments. To read this article in full, please click here
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