Looking at SAP SE’s (FRA:SAP) earnings update in December 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by -7.1% next year against the higher past 5-year average growth rate of 6.2%. Presently, with latest-twelve-month earnings at €4.1b, we should see this growing to €3.8b by 2020. Below is a brief commentary around SAP’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will SAP perform in the near future?
The 30 analysts covering SAP view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of SAP’s earnings growth over these next few years.
From the current net income level of €4.1b and the final forecast of €5.6b by 2022, the annual rate of growth for SAP’s earnings is 11%. EPS reaches €4.75 in the final year of forecast compared to the current €3.42 EPS today. Margins are currently sitting at 17%, which is expected to expand to 18% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For SAP, I’ve compiled three key factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is SAP worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SAP is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SAP? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.