Building up an investment case requires looking at a stock holistically. Today I've chosen to put the spotlight on SAP SE (FRA:SAP) due to its excellent fundamentals in more than one area. SAP is a financially-sound company with an impressive track record of dividend payments and a excellent future outlook. In the following section, I expand a bit more on these key aspects. For those interested in digging a bit deeper into my commentary, read the full report on SAP here.
High growth potential with adequate balance sheet and pays a dividend
Investors in search for stocks with room to flourish should look no further than SAP, with its expected earnings growth of 28% underlying the notable 20% return on equity over the next few years leading up to 2022. SAP’s debt-to-equity ratio stands at 5.3%, which means its debt level is acceptable. This indicates a good balance between taking advantage of low cost funding through debt financing, but having enough financial flexibility and headroom to grow debt in the future. SAP's has produced operating cash levels of 2.75x total debt over the past year, which implies that SAP's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.
SAP is also a dividend company, with ample net income to cover its dividend payout, which has been consistently growing over the past decade, keeping income investors happy.
For SAP, I've compiled three fundamental aspects you should further examine:
- Historical Performance: What has SAP's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 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 Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SAP? Explore our interactive list of stocks with large 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.