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SOFTWARE AG (SOW.DE) Stock Fundamental Analysis

FRA:SOW - Deutsche Boerse Ag - DE000A2GS401 - Common Stock - Currency: EUR

37.1  +0.1 (+0.27%)

Fundamental Rating

4

We assign a fundamental rating of 4 out of 10 to SOW. SOW was compared to 101 industry peers in the Software industry. SOW has a medium profitability rating, but doesn't score so well on its financial health evaluation. SOW is valied quite expensively at the moment, while it does show a decent growth rate.


Dividend Valuation Growth Profitability Health

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4

1. Profitability

1.1 Basic Checks

SOW had positive earnings in the past year.
SOW had a positive operating cash flow in the past year.
Each year in the past 5 years SOW has been profitable.
Each year in the past 5 years SOW had a positive operating cash flow.
SOW.DE Yearly Net Income VS EBIT VS OCF VS FCFSOW.DE Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 50M 100M 150M 200M

1.2 Ratios

SOW has a Return On Assets (0.66%) which is comparable to the rest of the industry.
The Return On Equity of SOW (1.13%) is comparable to the rest of the industry.
The Return On Invested Capital of SOW (2.20%) is comparable to the rest of the industry.
SOW had an Average Return On Invested Capital over the past 3 years of 3.42%. This is significantly below the industry average of 11.19%.
Industry RankSector Rank
ROA 0.66%
ROE 1.13%
ROIC 2.2%
ROA(3y)3.06%
ROA(5y)4.94%
ROE(3y)4.8%
ROE(5y)7.82%
ROIC(3y)3.42%
ROIC(5y)4.83%
SOW.DE Yearly ROA, ROE, ROICSOW.DE Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2 4 6 8 10

1.3 Margins

SOW has a Profit Margin (1.73%) which is in line with its industry peers.
SOW's Profit Margin has declined in the last couple of years.
SOW has a Operating Margin of 8.39%. This is comparable to the rest of the industry: SOW outperforms 58.43% of its industry peers.
In the last couple of years the Operating Margin of SOW has declined.
SOW has a Gross Margin of 74.51%. This is comparable to the rest of the industry: SOW outperforms 52.81% of its industry peers.
SOW's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 8.39%
PM (TTM) 1.73%
GM 74.51%
OM growth 3Y-23.97%
OM growth 5Y-16.12%
PM growth 3Y-51.53%
PM growth 5Y-34.12%
GM growth 3Y-0.97%
GM growth 5Y-0.2%
SOW.DE Yearly Profit, Operating, Gross MarginsSOW.DE Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 20 40 60

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3

2. Health

2.1 Basic Checks

SOW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for SOW remains at a similar level compared to 1 year ago.
SOW has a worse debt/assets ratio than last year.
SOW.DE Yearly Shares OutstandingSOW.DE Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 20M 40M 60M
SOW.DE Yearly Total Debt VS Total AssetsSOW.DE Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 500M 1B 1.5B 2B 2.5B

2.2 Solvency

SOW has an Altman-Z score of 2.81. This is not the best score and indicates that SOW is in the grey zone with still only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.81, SOW is in line with its industry, outperforming 56.18% of the companies in the same industry.
A Debt/Equity ratio of 0.22 indicates that SOW is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.22, SOW is in line with its industry, outperforming 59.55% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.22
Debt/FCF N/A
Altman-Z 2.81
ROIC/WACC0.36
WACC6.04%
SOW.DE Yearly LT Debt VS Equity VS FCFSOW.DE Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 500M 1B 1.5B

2.3 Liquidity

A Current Ratio of 1.10 indicates that SOW should not have too much problems paying its short term obligations.
With a Current ratio value of 1.10, SOW is not doing good in the industry: 73.03% of the companies in the same industry are doing better.
A Quick Ratio of 1.10 indicates that SOW should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.10, SOW is doing worse than 67.42% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 1.1
Quick Ratio 1.1
SOW.DE Yearly Current Assets VS Current LiabilitesSOW.DE Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 200M 400M 600M 800M

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5

3. Growth

3.1 Past

The earnings per share for SOW have decreased strongly by -66.45% in the last year.
SOW shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -17.86% yearly.
SOW shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.54%.
Measured over the past years, SOW shows a small growth in Revenue. The Revenue has been growing by 1.74% on average per year.
EPS 1Y (TTM)-66.45%
EPS 3Y-29.5%
EPS 5Y-17.86%
EPS Q2Q%-2.78%
Revenue 1Y (TTM)11.54%
Revenue growth 3Y2.47%
Revenue growth 5Y1.74%
Sales Q2Q%3.28%

3.2 Future

The Earnings Per Share is expected to grow by 34.58% on average over the next years. This is a very strong growth
Based on estimates for the next years, SOW will show a small growth in Revenue. The Revenue will grow by 5.22% on average per year.
EPS Next Y58.65%
EPS Next 2Y35.5%
EPS Next 3Y34.58%
EPS Next 5YN/A
Revenue Next Year5.86%
Revenue Next 2Y6.46%
Revenue Next 3Y7.28%
Revenue Next 5Y5.22%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
SOW.DE Yearly Revenue VS EstimatesSOW.DE Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 200M 400M 600M 800M 1B
SOW.DE Yearly EPS VS EstimatesSOW.DE Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.5 1 1.5 2 2.5

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3

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 71.35, SOW can be considered very expensive at the moment.
SOW's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of SOW to the average of the S&P500 Index (26.92), we can say SOW is valued expensively.
Based on the Price/Forward Earnings ratio of 22.70, the valuation of SOW can be described as rather expensive.
67.42% of the companies in the same industry are more expensive than SOW, based on the Price/Forward Earnings ratio.
SOW is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.49, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 71.35
Fwd PE 22.7
SOW.DE Price Earnings VS Forward Price EarningsSOW.DE Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60

4.2 Price Multiples

SOW's Enterprise Value to EBITDA is on the same level as the industry average.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 20.96
SOW.DE Per share dataSOW.DE EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 5 10 15 20

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
SOW's earnings are expected to grow with 34.58% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.22
PEG (5Y)N/A
EPS Next 2Y35.5%
EPS Next 3Y34.58%

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4

5. Dividend

5.1 Amount

With a yearly dividend of 0.13%, SOW is not a good candidate for dividend investing.
SOW's Dividend Yield is a higher than the industry average which is at 2.20.
With a Dividend Yield of 0.13, SOW pays less dividend than the S&P500 average, which is at 2.44.
Industry RankSector Rank
Dividend Yield 0.13%

5.2 History

The dividend of SOW has a limited annual growth rate of 5.26%.
Dividend Growth(5Y)5.26%
Div Incr Years0
Div Non Decr Years0
SOW.DE Yearly Dividends per shareSOW.DE Yearly Dividends per shareYearly Dividends per share 2019 2020 2021 2022 2023 0.2 0.4 0.6

5.3 Sustainability

21.59% of the earnings are spent on dividend by SOW. This is a low number and sustainable payout ratio.
The dividend of SOW is growing, but earnings are growing more, so the dividend growth is sustainable.
DP21.59%
EPS Next 2Y35.5%
EPS Next 3Y34.58%
SOW.DE Yearly Income VS Free CF VS DividendSOW.DE Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 50M 100M 150M
SOW.DE Dividend Payout.SOW.DE Dividend Payout, showing the Payout Ratio.SOW.DE Dividend Payout.PayoutRetained Earnings

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SOFTWARE AG

FRA:SOW (2/23/2024, 7:00:00 PM)

37.1

+0.1 (+0.27%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)N/A N/A
Earnings (Next)N/A N/A
Inst OwnersN/A
Inst Owner ChangeN/A
Ins OwnersN/A
Ins Owner ChangeN/A
Market Cap2.74B
Analysts45.71
Price Target31.05 (-16.31%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield 0.13%
Yearly Dividend0.77
Dividend Growth(5Y)5.26%
DP21.59%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-9.41%
Min EPS beat(2)-39.28%
Max EPS beat(2)20.46%
EPS beat(4)2
Avg EPS beat(4)-35.28%
Min EPS beat(4)-131.64%
Max EPS beat(4)20.46%
EPS beat(8)5
Avg EPS beat(8)-6.29%
EPS beat(12)9
Avg EPS beat(12)3.36%
EPS beat(16)11
Avg EPS beat(16)0.6%
Revenue beat(2)1
Avg Revenue beat(2)0.19%
Min Revenue beat(2)-1.66%
Max Revenue beat(2)2.03%
Revenue beat(4)2
Avg Revenue beat(4)0.5%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)2.93%
Revenue beat(8)3
Avg Revenue beat(8)0%
Revenue beat(12)6
Avg Revenue beat(12)0.84%
Revenue beat(16)8
Avg Revenue beat(16)1.05%
PT rev (1m)2.79%
PT rev (3m)0.76%
EPS NQ rev (1m)0%
EPS NQ rev (3m)28.04%
EPS NY rev (1m)0%
EPS NY rev (3m)10.38%
Revenue NQ rev (1m)1.16%
Revenue NQ rev (3m)0.34%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0%
Valuation
Industry RankSector Rank
PE 71.35
Fwd PE 22.7
P/S 2.77
P/FCF N/A
P/OCF 449.87
P/B 1.81
P/tB N/A
EV/EBITDA 20.96
EPS(TTM)0.52
EY1.4%
EPS(NY)1.63
Fwd EY4.4%
FCF(TTM)-0.06
FCFYN/A
OCF(TTM)0.08
OCFY0.22%
SpS13.4
BVpS20.47
TBVpS-0.84
PEG (NY)1.22
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 0.66%
ROE 1.13%
ROCE 4.34%
ROIC 2.2%
ROICexc 2.79%
ROICexgc N/A
OM 8.39%
PM (TTM) 1.73%
GM 74.51%
FCFM N/A
ROA(3y)3.06%
ROA(5y)4.94%
ROE(3y)4.8%
ROE(5y)7.82%
ROIC(3y)3.42%
ROIC(5y)4.83%
ROICexc(3y)4.86%
ROICexc(5y)6.94%
ROICexgc(3y)70.6%
ROICexgc(5y)N/A
ROCE(3y)6.77%
ROCE(5y)9.54%
ROICexcg growth 3Y-57.11%
ROICexcg growth 5YN/A
ROICexc growth 3Y-33.25%
ROICexc growth 5Y-24.74%
OM growth 3Y-23.97%
OM growth 5Y-16.12%
PM growth 3Y-51.53%
PM growth 5Y-34.12%
GM growth 3Y-0.97%
GM growth 5Y-0.2%
F-Score4
Asset Turnover0.38
Health
Industry RankSector Rank
Debt/Equity 0.22
Debt/FCF N/A
Debt/EBITDA 2.3
Cap/Depr 18.01%
Cap/Sales 1.07%
Interest Coverage 2.93
Cash Conversion 4.29%
Profit Quality N/A
Current Ratio 1.1
Quick Ratio 1.1
Altman-Z 2.81
F-Score4
WACC6.04%
ROIC/WACC0.36
Cap/Depr(3y)23.18%
Cap/Depr(5y)25.19%
Cap/Sales(3y)1.32%
Cap/Sales(5y)1.29%
Profit Quality(3y)86.04%
Profit Quality(5y)94.74%
High Growth Momentum
Growth
EPS 1Y (TTM)-66.45%
EPS 3Y-29.5%
EPS 5Y-17.86%
EPS Q2Q%-2.78%
EPS Next Y58.65%
EPS Next 2Y35.5%
EPS Next 3Y34.58%
EPS Next 5YN/A
Revenue 1Y (TTM)11.54%
Revenue growth 3Y2.47%
Revenue growth 5Y1.74%
Sales Q2Q%3.28%
Revenue Next Year5.86%
Revenue Next 2Y6.46%
Revenue Next 3Y7.28%
Revenue Next 5Y5.22%
EBIT growth 1Y1.57%
EBIT growth 3Y-22.09%
EBIT growth 5Y-14.66%
EBIT Next Year23.98%
EBIT Next 3Y23.42%
EBIT Next 5Y4.42%
FCF growth 1Y-104.62%
FCF growth 3Y-68.67%
FCF growth 5Y-50.37%
OCF growth 1Y-94.16%
OCF growth 3Y-52.53%
OCF growth 5Y-37.27%