August 31, 2023
Top 10 Stock SAP Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: SAP – Top 10 Stock in Deutscher Aktienindex DAX 40
SAP is listed as a top 10 stock on August 31, 2023 in the market index DAX 40 because of its high performance in at least one of the Obermatt investment strategies. As all consolidated Obermatt Ranks exhibit excellent performance, including positive market sentiment in the professional investor community, it is a solid stock investment where the risk of paying too much for the shares is limited. Based on the Obermatt 360° View of 73 (high 73% performer), Obermatt assesses an overall buy recommendation for SAP on August 31, 2023.
Snapshot: Obermatt Ranks
| Country | Germany |
| Industry | Application Software |
| Index | CDAX, DAX 40, EURO STOXX 50, Dividends Europe, Employee Focus EU, Human Rights, Renewables Users, TecDAX |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View SAP Buy
| 360 METRICS | August 31, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 63 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 50 |
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| SENTIMENT | ||||||||
| SENTIMENT | 67 |
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| 360° VIEW | ||||||||
| 360° VIEW | 73 |
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ANALYSIS: With an Obermatt 360° View of 73 (better than 73% compared with alternatives), overall professional sentiment and financial characteristics for the stock SAP are above average. The 360° View is based on consolidating four consolidated indicators, with all four indicators above average for SAP. The consolidated Value Rank has an attractive rank of 63, which means that the share price of SAP is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 63% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 83, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The company is also safely financed with a Safety rank of 50. Finally, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 67. ...read more
RECOMMENDATION: With a consolidated 360° View of 73, SAP is better positioned than 73% of all alternative stock investment opportunities based on the Obermatt Method. As all consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 63), above-average growth (Growth Rank of 83), safe financing practices (Safety Rank of 50), and a positive market sentiment in the professional investor community (Sentiment Rank of 67), it is a solid stock investment where the risk of paying too much for the shares is limited and disappointments are less likely to occur, unless information not publicly available. High-Value Ranks sometimes indicate that the company's future is challenging. If they are safely financed and have above average growth, and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of SAP is as difficult as the stock’s low price, despite what good growth and safe financing practice suggest. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible, which may indicate good timing right now. ...read more
Sentiment Strategy: Professional Market Sentiment for SAP positive
ANALYSIS: With an Obermatt Sentiment Rank of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock SAP is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the metrics below and half above average for SAP. Analyst Opinions are at a rank of 48 (worse than 52% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 47, which means that stock research experts are getting even more pessimistic. Other sentiment indicators are positive: The Professional Investors rank is 79, which means that professional investors hold more stock in this company than in 79% of alternative investment opportunities. So, pros tend to favor investing in this company. In addition, Market Pulse has a rank of 73, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 73% of competitors). While stock research analysts are getting ever more critical, many professional investors are committed to SAP and the professional news channels are on the positive side. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 67 (more positive than 67% compared with investment alternatives), SAP has a reputation among professional investors that is above-average compared with that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical, while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: SAP Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 63 (better than 63% compared with alternatives), SAP shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for SAP. Price-to-Profit (also referred to as price to earnings, P/E ratio) is 58 which means that the stock price compared with what market professionals expect for future profits is lower than for 58% of comparable companies, indicating a good value concerning SAP's profit levels. The same is valid for the expected Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 54, and for Dividend Yield with a Dividend Yield Rank of 77. But, compared with other companies in the same industry, the stock price is higher than average as regards expected revenues; only 70% of all competitors have an even higher stock price as regards to sales revenues (a Price-to-Sales Rank of 30). Profits, the level of invested capital, and dividend policy suggest that this stock is attractively priced. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 63, is a buy recommendation based on SAP's stock price compared with the company's operational size and dividend yields. Since it is on the expensive side for Price-to-Sales, it may mean that SAP has pricing power in its distribution market because it can charge higher prices than its competitors. If this is the case, all four value indicators are positive signals for purchasing SAP shares. ...read more
Growth Strategy: SAP Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 83 (better than 83% compared with alternatives) for 2023, SAP shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for SAP. Sales Growth has a rank of 58 which means that currently, professionals expect the company to grow more than 58% of its competitors. Both Profit Growth, with a rank of 69, and Stock Returns, with a rank of 85, are also above average. But Capital Growth only has a rank of 45, which means that, currently, professionals expect the company to grow its invested capital less than 55% of its competitors. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 83, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. ...read more
Safety Strategy: SAP Debt Financing Safety above-average
| SAFETY METRICS | August 31, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 47 |
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| REFINANCING | ||||||||
| REFINANCING | 42 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 60 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 50 |
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ANALYSIS: With an Obermatt Safety Rank of 50 (better than 50% compared with alternatives), the company SAP has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of SAP is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for SAP. Liquidity is at 60, meaning the company generates more profit to service its debt than 60% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 42, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 58% of its competitors. Leverage is also high at a rank of 47, which means that the company has an above-average debt-to-equity ratio. It has more debt than 53% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 50 (better than 50% compared with alternatives), SAP has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: SAP Top Financial Performance
| COMBINED PERFORMANCE | August 31, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 63 |
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| GROWTH | ||||||||
| GROWTH | 83 |
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| SAFETY | ||||||||
| SAFETY | 60 |
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| COMBINED | ||||||||
| COMBINED | 75 |
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ANALYSIS: With an Obermatt Combined Rank of 75 (better than 75% compared with investment alternatives), SAP (Application Software, Germany) shares have much better financial characteristics than comparable stocks. Shares of SAP are a good value (attractively priced) with a consolidated Value Rank of 63 (better than 63% of alternatives), show above-average growth (Growth Rank of 83), and are safely financed (Safety Rank of 50), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 75, is a strong buy recommendation based on SAP's financial characteristics. As the company SAP's key financial metrics all exhibit excellent performance, such as good value (Obermatt Value Rank of 63), above-average growth (Obermatt Growth Rank of 83), and indicate that the company is safely financed (Obermatt Safety Rank of 50), it is a solid stock investment where the risk of paying too much for the share is limited, unless the company has a bleak future. Such good financial performance can indicate that the company's future might actually be challenging, as it may be difficult to maintain the good performance. If they are safely financed and have been growing above average, and are still a good value, it means that the market is keeping prices low, for a reason which may become clearer over time. We recommend evaluating the future of SAP. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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