Discounted Cash Flow Calculation for OTCPK:SGPY.Y using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
OTCPK:SGPY.Y DCF 1st Stage: Next 10 year cash flow forecast
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Sage Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Sage Group's earnings are expected to grow by 6.8% yearly, however this is not considered high growth (20% yearly).
Sage Group's revenue is expected to grow by 5.8% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Sage Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
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 served as its Interim Chief Operating Officer since August 31, 2018. He was Group Chief Financial Officer of The Sage Group plc since January 3, 2014 until December 10, 2018. Mr. Hare served as Operating Partner, Co-Head of the Portfolio Support Group of Apax Partners LLP. He served as Chief Operating Officer of Apax Partners LLP until June 2012. He joined Apax Partners in 2009. Prior to joining Apax in 2009, he accumulated over 10 years' experience as Chief Financial Officer for three listed UK companies. Mr. Hare served as Chief Financial Officer of Invensys Plc. from July 21, 2006 to May 31, 2009. Mr. Hare served as a Group Finance Director of Spectris Plc, from December 1, 2004 to October 1, 2006. As finance director of Invensys and Spectris, he built a strong track record for driving organisational change, including greater focus on cash and margin improvement as well as upgrading processes to be consistent with a growing global business. He joined Spectris from Hba partners LLp, a consultancy he co-founded in 2003 and served as its Partner. On February1, 2013, he was appointed Interim Chief Executive Officer of Netrada GmbH and Netrada Europe GmbH. He served as Finance Director of Northwood Technologies Inc. Between 1997 and 2003, Mr. Hare was with Marconi PLC, where he served as an Acting Chief Financial Officer from 2001 and to 2003. He served as Chief Financial Officer of M (2003) plc.He was instrumental in achieving agreement for the successful financial restructuring package for the firm. He also oversaw a business divestment programme which raised in excess of 2bn over a twelve month period. Prior to Marconi, Mr. Hare served for eight years with GPT Limited (a joint venture between GEC and Siemens), where he worked his way up through the finance functions to become Group Finance Director. In 1985, he was with Ernst & Whinney, a part of Ernst & Young. He has significant financial and operating experience as a Chief Financial Officer. He served as a Director of Marken Limited, Invensys plc., from July 21, 2006 to May 31, 2009, Spectris Plc., from December 1, 2004 to July 21, 2006 and Marconi PLC. (M (2003) plc) until November 14, 2002. Mr. Hare is a Chartered Accountant and holds a Bachelor of Commerce from Liverpool University.
Steve's compensation has been consistent with company performance over the past year.
Steve's remuneration is lower than average for companies of similar size in United States of America.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Sage Group management team is less than 2 years, this suggests a new team.
CEO, Interim COO & Executive Director
President & Executive Director
Jonathan A. Howell
CFO & Director
Group Chief Technology Officer
Investor Relations Director
General Counsel & Company Secretary
Chief Marketing Officer
Executive Vice President of Commercial Finance & Corporate Development
Chief People Officer
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Sage Group board of directors is about average.
The Sage Group plc, together with its subsidiaries, provides technology solutions and services. It offers Sage business cloud accounting solution; Sage business cloud financials, a solution that provides real-time source of information; Sage business cloud people, a cloud HR and people system; Sage business cloud enterprise management, a solution for managing the business; and Sage Intacct, a solution for CFOs to access integrated management and financial reports across the business entities. The company serves customers ranging from start-ups to small and medium sized businesses, and mid-market companies. It operates in 23 countries across mainland Europe, Africa, Australia, Asia, and Latin America. The Sage Group plc was founded in 1981 and is headquartered in Newcastle upon Tyne, the United Kingdom.
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