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Analyzing SAP Stock's 29% YTD Gain: Will the Uptrend Last?
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SAP SE (SAP - Free Report) is witnessing strong momentum, with shares having gained 29.1% year to date compared with the S&P Composite’s growth of 15.6%. The company is one of the largest independent software vendors in the world and the leading provider of enterprise resource planning (ERP) software.
SAP’s performance is benefiting from continued strength in its cloud business across all regions. Its efforts have received a major push with the launch of Rise with SAP solution. This solution helps companies to transform their business processes and operations to become more nimble, digital and intelligent. RISE with SAP solution continues to gain significant traction and will aid the company drive its market share in the cloud ERP solutions’ space.
Momentum in SAP’s business technology platform particularly S/4HANA solutions augurs well. Frequent product launches like Grow with SAP and SAP Datasphere as well as strategic acquisitions and collaborations bode well.
SAP also divested its stake in Qualtrics to accelerate cloud transformation. Driven by strong momentum in the cloud market, SAP now expects cloud revenues to be more than €21.5 billion excluding Qualtrics. Management previously estimated cloud revenues to be more than €22 billion which included Qualtrics.
Image Source: Zacks Investment Research
SAP's continuing operations for 2025 are expected to be driven by momentum in cloud revenue growth, an increasing share of recurring revenues, the value of support and services business and a favorable currency environment compared with the earlier outlook published in October 2020. As a result, management is increasing its total revenue ambition for continuing operations by about €4 billion in 2025.
SAP's strong business momentum and the Qualtrics divestiture have prompted it to boost capital returns. SAP has announced a new share repurchase program in May 2023 which is expected to start in the second half of 2023 and is projected to be fully completed by 2025 end. This new authrization is in line with SAP's repurchases of 14 million shares for €1.5 billion in 2020 and around 16 million shares worth €1.5 billion in 2022.
SAP’s earnings per share are indicated to increase 31.1% and 18.5% on a year-over-year basis to $5.61 and $6.65 in 2023 and 2024, respectively. Revenues for 2023 and 2024 are projected to rise 5.8% and 8.6% to $34.34 billion and $37.3 billion, respectively.
However, the company’s performance is affected due to continued softness in the software license and support business segment coupled with global macroeconomic weakness and geopolitical instability. Also, increasing research & development and sales & marketing expenses, and stiff competition in the cloud space are concerns for this Zacks Rank #3 (Hold) stock.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 1.7% in the past 60 days to $3.58 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have gained 27.6% in the past year.
The consensus mark for Watts Water Technologies’ 2023 earnings is pegged at $7.27 per share, up 1.1% in the past 60 days. The long-term earnings growth rate is anticipated to be 8%.
Watts Water Technologies’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 16.3%. Shares of WTS have increased 40% in the past year.
The consensus mark for Blackbaud’s 2023 earnings is pegged at $3.75 per share, up 9.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 10.4%. Shares of BLKB have improved 27.4% in the past year.
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Analyzing SAP Stock's 29% YTD Gain: Will the Uptrend Last?
SAP SE (SAP - Free Report) is witnessing strong momentum, with shares having gained 29.1% year to date compared with the S&P Composite’s growth of 15.6%. The company is one of the largest independent software vendors in the world and the leading provider of enterprise resource planning (ERP) software.
SAP’s performance is benefiting from continued strength in its cloud business across all regions. Its efforts have received a major push with the launch of Rise with SAP solution. This solution helps companies to transform their business processes and operations to become more nimble, digital and intelligent. RISE with SAP solution continues to gain significant traction and will aid the company drive its market share in the cloud ERP solutions’ space.
Momentum in SAP’s business technology platform particularly S/4HANA solutions augurs well. Frequent product launches like Grow with SAP and SAP Datasphere as well as strategic acquisitions and collaborations bode well.
SAP also divested its stake in Qualtrics to accelerate cloud transformation. Driven by strong momentum in the cloud market, SAP now expects cloud revenues to be more than €21.5 billion excluding Qualtrics. Management previously estimated cloud revenues to be more than €22 billion which included Qualtrics.
Image Source: Zacks Investment Research
SAP's continuing operations for 2025 are expected to be driven by momentum in cloud revenue growth, an increasing share of recurring revenues, the value of support and services business and a favorable currency environment compared with the earlier outlook published in October 2020. As a result, management is increasing its total revenue ambition for continuing operations by about €4 billion in 2025.
SAP's strong business momentum and the Qualtrics divestiture have prompted it to boost capital returns. SAP has announced a new share repurchase program in May 2023 which is expected to start in the second half of 2023 and is projected to be fully completed by 2025 end. This new authrization is in line with SAP's repurchases of 14 million shares for €1.5 billion in 2020 and around 16 million shares worth €1.5 billion in 2022.
SAP’s earnings per share are indicated to increase 31.1% and 18.5% on a year-over-year basis to $5.61 and $6.65 in 2023 and 2024, respectively. Revenues for 2023 and 2024 are projected to rise 5.8% and 8.6% to $34.34 billion and $37.3 billion, respectively.
However, the company’s performance is affected due to continued softness in the software license and support business segment coupled with global macroeconomic weakness and geopolitical instability. Also, increasing research & development and sales & marketing expenses, and stiff competition in the cloud space are concerns for this Zacks Rank #3 (Hold) stock.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Woodward (WWD - Free Report) , Watts Water Technologies (WTS - Free Report) and Blackbaud (BLKB - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 earnings has increased 1.7% in the past 60 days to $3.58 per share. WWD’s long-term earnings growth rate is anticipated to be 13.5%. Shares of WWD have gained 27.6% in the past year.
The consensus mark for Watts Water Technologies’ 2023 earnings is pegged at $7.27 per share, up 1.1% in the past 60 days. The long-term earnings growth rate is anticipated to be 8%.
Watts Water Technologies’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 16.3%. Shares of WTS have increased 40% in the past year.
The consensus mark for Blackbaud’s 2023 earnings is pegged at $3.75 per share, up 9.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average beat being 10.4%. Shares of BLKB have improved 27.4% in the past year.