What Enabled SAP Stock to Reach Its All-Time High This Week?



Improved fiscal first-quarter results and upbeat guidance

Earlier in the series, we discussed SAP’s (SAP) acquisition of Coresystems and the launch of its fourth-generation customer experience suite, C/4HANA, both of which are expected to benefit the company tremendously in the customer relationship management market.

SAP’s new cloud bookings grew 25% in constant currency terms to 245 million euros in the fiscal first quarter. New cloud bookings are viewed as an important indicator of revenue growth in the cloud market. During the quarter, SAP added Unilever, Jaguar Land Rover, and the Coca-Cola Company to its customer experience solutions client base.

On an IFRS (International Financial Reporting Standards) basis, though the company’s fiscal first-quarter revenue of 5.3 billion euros (or ~$6.4 billion) was flat on a YoY (year-over-year) basis, its EPS of 0.59 euros (or $0.71) reflected a rise of 37%. The increased traction of SAP’s cloud business, which includes S/4HANA and other initiatives in this space, and the improvement in its support revenue helped the company to report growth during the quarter as well as to raise its guidance for fiscal 2018.

The company expects its non-IFRS total revenue and operating profit in constant currency terms to be in the range of 24.8 billion–25.3 billion euros and 7.35 billion–7.5 billion euros, respectively, as the above presentation shows. Earlier, the company provided revenue and EPS guidances in the range of 24.6 billion–25.1 billion and 7.3 billion–7.5 billion euros, respectively.

SAP’s stock performance compared to the computer software industry

Improved fiscal first-quarter results and improved guidance have boosted SAP stock, which reached an all-time high of $120.58 on June 12. Operating in the enterprise software space, SAP stock has gained 30% and 29%, respectively, YTD (year-to-date) and YoY (year-over-year). SAP is part of the computer software industry, which has risen 18% and 37% YTD and YoY, respectively.

Thus, SAP stock has outperformed the growth of its industry so far in 2018. However, it’s lagging a little when it comes to last year’s performance.

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