OTCPK:SGPY.Y

Stock Analysis Report

Executive Summary

The Sage Group plc, together with its subsidiaries, provides technology solutions and services.

Rewards

PE ratio (32x) is below the Software industry average (52.1x)

Earnings are forecast to grow 8.86% per year

Pays a high and reliable dividend of 2.16%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Established dividend payer with adequate balance sheet.


Similar Companies

Share Price & News

How has Sage Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SGPY.Y has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.1%

SGPY.Y

1.7%

US Software

1.5%

US Market


1 Year Return

20.7%

SGPY.Y

42.3%

US Software

20.1%

US Market

Return vs Industry: SGPY.Y underperformed the US Software industry which returned 42.2% over the past year.

Return vs Market: SGPY.Y matched the US Market which returned 20.1% over the past year.


Shareholder returns

SGPY.YIndustryMarket
7 Day2.1%1.7%1.5%
30 Day6.7%7.7%1.4%
90 Day6.4%18.4%8.7%
1 Year21.5%20.7%43.9%42.3%22.7%20.1%
3 Year34.3%28.0%152.8%142.4%50.1%40.5%
5 Year52.8%39.8%224.7%201.5%73.1%54.1%

Price Volatility Vs. Market

How volatile is Sage Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Sage Group undervalued compared to its fair value and its price relative to the market?

32x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SGPY.Y ($41.46) is trading above our estimate of fair value ($25.75)

Significantly Below Fair Value: SGPY.Y is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: SGPY.Y is good value based on its PE Ratio (32x) compared to the Software industry average (52.1x).

PE vs Market: SGPY.Y is poor value based on its PE Ratio (32x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SGPY.Y is poor value based on its PEG Ratio (3.6x)


Price to Book Ratio

PB vs Industry: SGPY.Y is good value based on its PB Ratio (5.7x) compared to the US Software industry average (6x).


Next Steps

Future Growth

How is Sage Group forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

8.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SGPY.Y's forecast earnings growth (8.9% per year) is above the savings rate (1.7%).

Earnings vs Market: SGPY.Y's earnings (8.9% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: SGPY.Y's earnings are forecast to grow, but not significantly.

Revenue vs Market: SGPY.Y's revenue (4.4% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SGPY.Y's revenue (4.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SGPY.Y's Return on Equity is forecast to be low in 3 years time (19.2%).


Next Steps

Past Performance

How has Sage Group performed over the past 5 years?

11.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SGPY.Y has high quality earnings.

Growing Profit Margin: SGPY.Y's current net profit margins (13.7%) are lower than last year (16%).


Past Earnings Growth Analysis

Earnings Trend: SGPY.Y's earnings have grown by 11.7% per year over the past 5 years.

Accelerating Growth: SGPY.Y's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SGPY.Y had negative earnings growth (-9.8%) over the past year, making it difficult to compare to the Software industry average (17.1%).


Return on Equity

High ROE: SGPY.Y's Return on Equity (17.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Sage Group's financial position?


Financial Position Analysis

Short Term Liabilities: SGPY.Y's short term assets (£801.0M) do not cover its short term liabilities (£1.1B).

Long Term Liabilities: SGPY.Y's short term assets (£801.0M) exceed its long term liabilities (£722.0M).


Debt to Equity History and Analysis

Debt Level: SGPY.Y's debt to equity ratio (50.9%) is considered high.

Reducing Debt: SGPY.Y's debt to equity ratio has reduced from 70.4% to 50.9% over the past 5 years.

Debt Coverage: SGPY.Y's debt is well covered by operating cash flow (61.7%).

Interest Coverage: SGPY.Y's interest payments on its debt are well covered by EBIT (19.3x coverage).


Balance Sheet

Inventory Level: SGPY.Y has a low level of unsold assets or inventory.

Debt Coverage by Assets: SGPY.Y's debt is covered by short term assets (assets are 1x debt).


Next Steps

Dividend

What is Sage Group's current dividend yield, its reliability and sustainability?

2.16%

Current Dividend Yield


Dividend Yield vs Market

company2.2%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years2.3%

Current dividend yield vs market & industry

Notable Dividend: SGPY.Y's dividend (2.16%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: SGPY.Y's dividend (2.16%) is low compared to the top 25% of dividend payers in the US market (3.69%).


Stability and Growth of Payments

Stable Dividend: SGPY.Y's dividends per share have been stable in the past 10 years.

Growing Dividend: SGPY.Y's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (69%), SGPY.Y's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SGPY.Y's dividends in 3 years are forecast to be covered by earnings (52.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure


CEO

Steve Hare (58yo)

1.3yrs

Tenure

UK£2,515,000

Compensation

Mr. Stephen Hare, also known as Steve, BA, ACA, is Chief Executive Officer of The Sage Group plc since November 2, 2018. He has been Executive Director of The Sage Group plc since January 3, 2014 and has s ...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD3.28M) is below average for companies of similar size in the US market ($USD10.81M).

Compensation vs Earnings: Steve's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Stephen Hare
CEO, Interim COO & Executive Director1.3yrsUK£2.52m0.032% £3.6m
Daniel Crump
President & Executive Director2.1yrsUK£1.70mno data
Jonathan Anton Howell
CFO & Director6.8yrsUK£1.66m0.012% £1.3m
Aaron Harris
Chief Technology Officer0.8yrsno data0.024% £2.6m
Lauren Wholley
Investor Relations Director0yrsno datano data
Victoria Bradin
General Counsel & Company Secretary3.3yrsno data0.0012% £138.2k
Ron McMurtrie
Chief Marketing & Business Enablement Officer3.1yrsno data0.0018% £197.2k
Derk Bleeker
Chief Corporate Development Officer0yrsno data0.0034% £384.4k
Amanda Cusdin
Chief People Officer2.3yrsno data0.0026% £289.7k
Klaus-Michael Vogelberg
Chief Architect & Technology Advisor0.8yrsno data0.035% £3.9m

1.8yrs

Average Tenure

54yo

Average Age

Experienced Management: SGPY.Y's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Stephen Hare
CEO, Interim COO & Executive Director1.3yrsUK£2.52m0.032% £3.6m
Daniel Crump
President & Executive Director2.1yrsUK£1.70mno data
Jonathan Anton Howell
CFO & Director6.8yrsUK£1.66m0.012% £1.3m
Donald Brydon
Independent Chairman7.4yrsUK£434.00k0.0092% £1.0m
John Bates
Independent Non-Executive Director0.8yrsUK£20.00kno data
John William Hall
Independent Non-Executive Director6.1yrsUK£82.00k0.00092% £102.5k
Catherine Keers
Independent Non-Executive Director2.6yrsUK£60.00kno data
Annette Court
Independent Non-Executive Director0.8yrsUK£39.00k0.00012% £13.4k
Soni Jiandani
Independent Non-Executive Director3yrsUK£60.00kno data
Jonathan Bewes
Independent Non-Executive Director0.8yrsUK£39.00k0.00092% £102.5k

2.8yrs

Average Tenure

57yo

Average Age

Experienced Board: SGPY.Y's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

The Sage Group plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The Sage Group plc
  • Ticker: SGPY.Y
  • Exchange: OTCPK
  • Founded: 1981
  • Industry: Application Software
  • Sector: Software
  • Market Cap: UK£8.554b
  • Listing Market Cap: UK£11.143b
  • Shares outstanding: 1.09b
  • Website: https://www.sage.com

Number of Employees


Location

  • The Sage Group plc
  • North Park
  • Newcastle upon Tyne
  • Tyne and Wear
  • NE13 9AA
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SGGE.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1990
SGELSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1990
SGK1DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1990
SGELBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1990
SGPY.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDJan 2005

Biography

The Sage Group plc, together with its subsidiaries, provides technology solutions and services. It offers Sage business cloud accounting solution; Sage business cloud Payroll, an online payroll system; Sage business cloud Intacct, a financial management system, which automates complex processes and enhance company performance; Sage business cloud people, a cloud HR and people management solution; and Sage business cloud X3, a business management solution. The company also provides cloud connected solutions, Sage 50cloud, and Sage 200cloud. It operates North America, Northern Europe, and Central and Southern Europe. The Sage Group plc was founded in 1981 and is headquartered in Newcastle upon Tyne, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 00:13
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2019/09/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.