OTCPK:STWR.Y

Stock Analysis Report

Executive Summary

Software Aktiengesellschaft provides software development, licensing, and maintenance; and information (IT) services worldwide.

Rewards

Trading at 20% below its fair value

Risk Analysis

Earnings are forecast to decline by an average of -3.7% per year for the next 3 years

Unstable dividend track record



Snowflake Analysis

Flawless balance sheet and good value.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

0%

STWR.Y

1.7%

US Software

1.5%

US Market


1 Year Return

-4.9%

STWR.Y

42.3%

US Software

20.1%

US Market

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

Return vs Market: STWR.Y underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

STWR.YIndustryMarket
7 Day0%1.7%1.5%
30 Day4.8%7.7%1.4%
90 Day7.0%18.4%8.7%
1 Year-3.5%-4.9%43.9%42.3%22.7%20.1%
3 Year6.7%3.0%152.8%142.4%50.1%40.5%
5 Year43.2%35.1%224.7%201.5%73.1%54.1%

Price Volatility Vs. Market

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


Simply Wall St News

No news available

Valuation

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

20.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: STWR.Y ($9.35) is trading below our estimate of fair value ($11.68)

Significantly Below Fair Value: STWR.Y is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: STWR.Y is good value based on its PE Ratio (16.4x) compared to the Software industry average (52.1x).

PE vs Market: STWR.Y is good value based on its PE Ratio (16.4x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: STWR.Y's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: STWR.Y is good value based on its PB Ratio (1.9x) compared to the US Software industry average (6x).


Next Steps

Future Growth

How is Software forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

-3.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: STWR.Y's earnings are forecast to decline over the next 3 years (-3.7% per year).

Earnings vs Market: STWR.Y's earnings are forecast to decline over the next 3 years (-3.7% per year).

High Growth Earnings: STWR.Y's earnings are forecast to decline over the next 3 years.

Revenue vs Market: STWR.Y's revenue (1.9% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: STWR.Y's revenue (1.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: STWR.Y's Return on Equity is forecast to be low in 3 years time (9.4%).


Next Steps

Past Performance

How has Software performed over the past 5 years?

6.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: STWR.Y has high quality earnings.

Growing Profit Margin: STWR.Y's current net profit margins (17.4%) are lower than last year (19%).


Past Earnings Growth Analysis

Earnings Trend: STWR.Y's earnings have grown by 6.1% per year over the past 5 years.

Accelerating Growth: STWR.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: STWR.Y had negative earnings growth (-6%) over the past year, making it difficult to compare to the Software industry average (17.1%).


Return on Equity

High ROE: STWR.Y's Return on Equity (11.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Software's financial position?


Financial Position Analysis

Short Term Liabilities: STWR.Y's short term assets (€776.0M) exceed its short term liabilities (€468.2M).

Long Term Liabilities: STWR.Y's short term assets (€776.0M) exceed its long term liabilities (€290.4M).


Debt to Equity History and Analysis

Debt Level: STWR.Y's debt to equity ratio (18.9%) is considered satisfactory.

Reducing Debt: STWR.Y's debt to equity ratio has reduced from 44.5% to 18.9% over the past 5 years.

Debt Coverage: STWR.Y's debt is well covered by operating cash flow (67.1%).

Interest Coverage: STWR.Y earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

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

Debt Coverage by Assets: STWR.Y's debt is covered by short term assets (assets are 3x debt).


Next Steps

Dividend

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

2.07%

Current Dividend Yield


Dividend Yield vs Market

company2.1%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years1.9%

Current dividend yield vs market & industry

Notable Dividend: STWR.Y's dividend (2.07%) is higher than the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: STWR.Y's dividend (2.07%) is low compared to the top 25% of dividend payers in the US market (3.69%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, STWR.Y has been paying a dividend for less than 10 years.

Growing Dividend: STWR.Y's dividend payments have increased, but the company has only paid a dividend for 2 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (33.9%), STWR.Y's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: STWR.Y's dividends in 3 years are forecast to be well covered by earnings (29.7% payout ratio).


Next Steps

Management

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

1.3yrs

Average management tenure


CEO

Sanjay Brahmawar 0

1.5yrs

Tenure

€2,697,563

Compensation

Mr. Sanjay Brahmawar has been Chief Executive Officer and Chairman of the Management Board of Software AG, Inc. and Software Aktiengesellschaft since August 1, 2018. Mr. Brahmawar serves as General Manager ...


CEO Compensation Analysis

Compensation vs Market: Sanjay's total compensation ($USD2.92M) is below average for companies of similar size in the US market ($USD4.88M).

Compensation vs Earnings: Insufficient data to compare Sanjay's compensation with company performance.


Leadership Team

NamePositionTenureCompensationOwnership
Sanjay Brahmawar
Chairman of the Management Board & CEO1.5yrs€2.70mno data
Arnd Zinnhardt
CFO & Member of the Management Board18.1yrs€3.66m0.034% 942.6k
Stefan Sigg
Chief Product Officer & Member of Management Board2.8yrs€1.88mno data
John Schweitzer
Chief Revenue Officer & Member of the Management Board1.3yrs€1.09mno data
Elke Frank
Chief Human Resources Officer & Member of Executive Board0.5yrsno datano data
Bernd Gross
Chief Technology Officer1.1yrsno datano data
Otmar Winzig
Senior VP & Head of Investor Relations0yrsno datano data
Benno Quade
Senior Vice President of Global Legal0yrsno datano data
Byung-Hun Park
Senior Vice President of Corporate Communications0yrsno datano data
Paz Macdonald
Chief Marketing Officer1.1yrsno datano data

1.3yrs

Average Tenure

54yo

Average Age

Experienced Management: STWR.Y's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Andreas Bereczky
Chairman of Supervisory Board10.8yrs€185.20kno data
Markus Ziener
Member of Supervisory Board4.8yrs€74.00kno data
Alf Wulf
Member of the Supervisory Board12.8yrs€86.00k0.00054% 14.9k
Eun-Kyung Park
Member of Supervisory Board4.8yrs€78.00kno data
Guido Falkenberg
Deputy Chairman of Supervisory Board4.8yrs€119.00kno data
Christian Zimmermann
Member of Supervisory Board4.8yrs€72.00kno data

4.8yrs

Average Tenure

55yo

Average Age

Experienced Board: STWR.Y's board of directors are considered experienced (4.8 years average tenure).


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

Software Aktiengesellschaft's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Software Aktiengesellschaft
  • Ticker: STWR.Y
  • Exchange: OTCPK
  • Founded: 1969
  • Industry: Systems Software
  • Sector: Software
  • Market Cap: €2.537b
  • Listing Market Cap: €2.750b
  • Shares outstanding: 73.98m
  • Website: https://www.softwareag.com

Number of Employees


Location

  • Software Aktiengesellschaft
  • Uhlandstrasse 12
  • Darmstadt
  • Hessen
  • 64297
  • Germany

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
STWR.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDNov 2005
SWDA.FOTCPK (Pink Sheets LLC)YesRegistered SharesUSUSDOct 2017
SOWDB (Deutsche Boerse AG)YesRegistered SharesDEEUROct 2017
SOWDBATS-CHIXE (BATS 'Chi-X Europe')YesRegistered SharesGBEUROct 2017
SOWWBAG (Wiener Boerse AG)YesRegistered SharesATEUROct 2017
0RULLSE (London Stock Exchange)YesRegistered SharesGBEUROct 2017
SOWSWX (SIX Swiss Exchange)YesRegistered SharesCHCHFOct 2017
SOWXTRA (XETRA Trading Platform)YesRegistered SharesDEEUROct 2017
SOW-UETLX (Eurotlx)YesRegistered SharesITEUROct 2017

Biography

Software Aktiengesellschaft provides software development, licensing, and maintenance; and information (IT) services worldwide. It operates through three segments: Digital Business Platform, Adabas & Natural, and Consulting. The company offers Adabas & Natural, a transaction processing platform that enables digital enterprises to leverage core systems in various ways; Alfabet for use in IT planning and portfolio management, as well as enterprise architecture management; Apama, a platform for streaming analytics and intelligent automated actions on fast-moving big data; and Architecture for Integrated Information Systems, a platform that makes processes transparent, controlled, manageable, and agile. It also provides cloud-based platform-as-a-service suite, such as CONNX that provides secure, and real-time read/write SQL data access and integration; Cumulocity, which offers Internet of Things (IoT) connectivity for networked digital devices and sensors through a cloud-hosted IoT device management and application enablement platform; Terracotta, a platform that enables digital enterprises to access and store large volumes of data in-memory, as well as enhance system performance; webMethods, which enables customers to integrate systems, partners, data, devices, and software as a service applications; and Zementis that enables predictive analytics with artificial intelligence and machine learning capabilities. Further, the company provides digital transformation consulting, platform consulting, performance ready content, platform rapid innovation methodology, training, and support services. It offers its products and services for customers in banking and securities, communication and media, education, energy and natural resources, manufacturing, retail, transportation, healthcare, insurance, utilities, and government sectors. Software Aktiengesellschaft was founded in 1969 and is headquartered in Darmstadt, Germany. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 00:00
End of Day Share Price2020/02/05 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.