SAP SE (ETR:SAP) First-Quarter Results: Here's What Analysts Are Forecasting For This Year

Shareholders might have noticed that SAP SE (ETR:SAP) filed its quarterly result this time last week. The early response was not positive, with shares down 5.6% to €107 in the past week. It was a credible result overall, with revenues of €6.5b and statutory earnings per share of €0.68 both in line with analyst estimates, showing that SAP is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for SAP

Taking into account the latest results, SAP's 31 analysts currently expect revenues in 2020 to be €28.3b, approximately in line with the last 12 months. Per-share earnings are expected to swell 11% to €3.96. In the lead-up to this report, the analysts had been modelling revenues of €28.2b and earnings per share (EPS) of €3.94 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of €123, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on SAP, with the most bullish analyst valuing it at €147 and the most bearish at €80.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that SAP's revenue growth is expected to slow, with forecast 1.0% increase next year well below the historical 7.3%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.8% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than SAP.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that SAP's revenues are expected to perform worse than the wider industry. The consensus price target held steady at €123, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on SAP. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for SAP going out to 2023, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for SAP that you need to be mindful of.

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