SAP AG (NYSE:SAP) is rated at BUY with a grade of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- The gross profit margin for SAP AG is currently very high, coming in at 73.70%. Regardless of SAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 15.65% trails the industry average.
- Although SAP's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- Net operating cash flow has increased to $889.76 million or 28.53% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.31%.
- Compared to its closing price of one year ago, SAP's share price has jumped by 34.14%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SAP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
SAP AG provides enterprise application software and software-related services worldwide.You can view the full SAP AG Ratings Report or get investment ideas from our investment research center.
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