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SAP SE (SAPGF)

NEUTRAL
TechnologySoftware - ApplicationGermany

Fundamental

63

Price

$185.64

Market Cap

$215.70B

Part 1 · What the company is worth

Overview

SAP makes the software many large companies run their core operations on — accounting, supply chain, manufacturing and human resources — bundled into a system called ERP (enterprise resource planning). Once a company builds its finance and operations processes around SAP's system, that software becomes the record of how the business runs, which is why customers rarely switch providers. SAP is shifting its customers from software installed on their own servers to cloud subscriptions it hosts and updates itself.

How it makes money

Cloud subscriptions are billed recurring, usually annual, fees tied to usage or number of users, and now make up the majority of what SAP calls cloud and software revenue; older on-premise licenses are sold once and then generate smaller annual maintenance fees, a mix that is shrinking as customers migrate. Services revenue, a smaller and less profitable slice, comes from consultants helping customers implement and migrate these systems, typically billed by the project or by time.

Revenue by segment

Cloud and Software88.4%

Cloud subscription revenue, now SAP's largest line, plus remaining on-premise software licenses and their maintenance fees.

Services11.6%

Consulting, implementation and training services that help customers deploy and migrate SAP software, billed separately from the software itself.

Competitive moat

Switching costs · Wide

SAP's software becomes deeply embedded in how a large company records its finances and runs its operations, with years of customization, staff training and connections to other internal systems built on top of it. Independent studies have found that switching ERP providers typically costs several times the original software price and takes over a year, which is why SAP keeps the large majority of its enterprise customers even when rivals offer comparable features.

What drives demand

Moderately cyclical

Recurring cloud subscriptions make revenue more predictable than a typical software license business, since customers rarely cancel core ERP systems even when budgets tighten. Still, corporate IT spending does slow in downturns, and the pace at which customers commit to new cloud migrations can stretch out when their own businesses are under pressure.

Key risks

  • Intense competition in enterprise software — The company faces sustained competition from large rivals such as Oracle and Salesforce, who are also embedding AI features into cloud applications, which pressures pricing and can slow customer wins.
  • Cloud migration execution risk — Moving large customers from on-premise systems to the cloud involves remediating custom code, cleaning data and securing internal support within the customer's organization, and on-premise license revenue is declining meaningfully as this transition proceeds.
  • Data, antitrust and regulatory exposure — The company is subject to data-access and antitrust-related claims, including allegations of lock-in effects, as well as dependence on third-party cloud infrastructure and web services it does not fully control.

The case for

Buyers see a company that has successfully shifted the majority of its revenue to recurring cloud subscriptions, still holds the deepest customer lock-in in enterprise software, and can raise prices on a captive base of hundreds of thousands of customers as it layers AI features onto the same ERP backbone.

The case against

Sellers worry that the on-premise license decline is eroding a historically high-margin revenue stream faster than cloud subscriptions can fully replace it, that cloud backlog growth is expected to moderate as the business scales, and that well-funded rivals embedding their own AI agents could chip away at renewal pricing over time.

Written by the editors, published on August 18, 2026

Direct competitors

Who this company fights with for the same customers

No editorial profile for this company yet

No competitor list for this company yet.

Balance Sheet & Liquidity

Revenue

$38.19B

Trailing 12 months (through 6/30/2026)

Net Income

$7.80B

Trailing 12 months (through 6/30/2026)

Free Cash Flow

$9.09B

Total Equity

$44.74B

Total Liabilities

$9.94B

Current Ratio

1.15

Interest Coverage

-

Debt/EBITDA

0.85

Earnings Per Share

Revenue & Net Income

Free Cash Flow

Income Breakdown

Historical statement

Margins over time

Debt over time

How heavy the debt is

Growth grid

Growth — Revenue

Fair Value Estimation

Overvalued

Fair Value

$146.32

Current Price

$185.64

Margin of Safety

-26.9%

Fair Value Range

$101.17 - $191.46

Estimation Methods

Analyst Target:$205.77
DCF:$130.06
PE-based:$114.54
Graham Growth:$131.91
EPV:$67.02
Analyst Consensus:Buy (30B / 7H / 2S)
Last Earnings Surprise:-11.11%

Valuation Metrics

P/E Ratio

27.98

ROE

18.3%

P/B Ratio

4.82

P/FCF

23.73

Gross Margin

73.7%

ROIC

15.2%

Profitability Radar

Value Creation (Economic Moat)

ROIC

15.2%

WACC

9.9%

ROIC − WACC

+5.3 pp

ROIC exceeds the cost of capital — the company is creating value for shareholders.

Fundamental Analysis Criteria

Passed (14)

  • Price CAGR 8.32%
  • ROIC 15.2%
  • Gross Margin 73.7%
  • P/FCF 23.73
  • Debt/Equity ratio
  • Positive Free Cash Flow
  • CapEx intensity
  • Current Ratio
  • Debt/EBITDA
  • ROE 17.6%
  • Revenue Growth 5Y 6.1%
  • Analyst Consensus 77% Buy
  • Earnings Quality (OCF/NI) 1.26
  • Net Margin Trend 20.4% vs 9.1%

Failed (5)

  • P/B Ratio 4.82
  • DCF valuation (Overvalued)
  • Earnings Surprise avg -0.8%
  • PEG Ratio 3.78
  • Piotroski F-Score 2/9

Unavailable (8)

  • EPS data insufficient
  • Dividend Payout NaN%
  • Operating Margin NaN%
  • Interest Coverage
  • Return on Tangible Assets
  • Low reliance on intangibles
  • Price below Graham Number
  • Share Dilution (missing shares data)

Piotroski F-Score

2/9

Serious financial concerns

score
criteria

Earnings Quality

1.26

High quality: earnings backed by cash

Share Dilution

-

Buying back shares. Shareholder friendly

Governance

Executive Team

NameTitleAge
Mr. Christian KleinCEO & Member of Executive Board45
Mr. Lars LamadeHead of Global Sponsorships & Deputy Chairperson of the Supervisory Board54
Mr. Dominik AsamCFO & Member of Executive Board56
Mr. Thomas SaueressigMember of Executive Board40
Mr. Sebastian SteinhaeuserChief Strategy Officer & COO and Member of Executive Board39
Ms. Gina Vargiu-BreuerChief People Officer, Labor Director & Member of Executive Board49
Mr. Muhammad AlamLead Product Engineering & Member of Executive Board47
Mr. Andreas HahnChairperson of Works Council Europe & Works Council Europe Rep Member of Supervisory Board54
Jakub CernyDemand Manager & Works Council Europe Representative Member of Supervisory Board43
Mr. Pascal DematSolution Advisor HCM & Works Council Europe Representative Member of Supervisory Board58

Audit Risk

10

Board Risk

2

Compensation Risk

1

Shareholder Rights Risk

1

Part 2 · The price and when to enter

This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.

Latest News

Recent headlines for SAPGF, sourced from Markets Gazette.

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