Enterprise application software provider, SAP SE (SAP - Analyst Report) is on a roll, clinching multiple contracts for its human capital management ("HCM") solutions that help manage human resources (“HR”) on the cloud platform. The company’s proprietary cloud-based SAP SuccessFactors HCM Solutions has been significantly driving top-line growth. The recent client additions suggest this momentum is unlikely to fizzle out anytime soon.
SuccessFactors Transforms HR Practices
The new clientele include Germany-based engineering and services firm Bilfinger SE, Brazilian credit and debit card operator Cielo S.A., Chinese cosmetic enterprise company Guangzhou Uniasia Cosmetics Technology, Singapore’s retail giant NTUC Fairprice Co-Operative Limited and China-based rental car company UCAR Inc.
Rise in demand for sophisticated technology infrastructure for HR modernization from multiple industries is propelling the growth of SuccessFactors HCM Solutions. SAP believes that Intelligent HCM solutions are cornerstone for digital transformation. This is, in turn, is propelling the growth of SAP’s overarching offering. Going forward, SAP will participate in multiple upcoming HR seminars, including the SuccessConnect conferences in Sydney, Tokyo, Singapore and Vienna. These conferences are aimed at formulating strategies to digitize processes and strategies related to HR.
Human Resource Solutions: A Catalyst
SuccessFactors Employee Central is the backbone of the company’s Human Capital Management offerings and surpassed the 1,250-customer mark in the second-quarter 2016. These offerings are increasingly empowering clients to manage both permanent and temporary workforce. Encouragingly, in Europe alone, over 1000 clients have deployed SAP’s HCM solutions, choosing it over Workday, Inc.’s (WDAY - Snapshot Report) (one of its key competitors in the region) cloud offerings, with a mere 100 customers.
In addition, the company is better placed against its key HCM peers, even in markets outside the U.S. This apart, rapid market traction of Customer Engagement and Commerce solutions also looks promising. During second-quarter 2016, CEC introduces “SAP Hybris as a Service” on SAP HANA Cloud Platform to boost growth.
Despite strong traction of SAP’s HCM solutions, dull prospects of global IT with flat customer spending projections for the rest of 2016 may thwart the company’s growth. Further, weakness in Latin-American countries continues to mar the company’s sales in the region, thereby affecting the top line.
SAP currently carries a Zacks rank #3 (Hold). Some better-ranked stocks in the same space include Aspen Technology, Inc. (AZPN - Snapshot Report) and Callidus Software Inc. (CALD - Snapshot Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aspen Technology deals in process optimization software and services. It boasts a remarkable average positive surprise of 24.3% over the trailing four quarters, beating estimates comfortably in each of them.
Callidus Software is a provider of Enterprise Incentive Management software, with a modest earnings history. It has beaten estimates twice in the trailing four quarters, however managed to garner an average positive surprise of 14.8%.
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