0R15 9025.0 0.0% 0R1E 9410.0 0.0% 0M69 None None% 0R2V 247.99 9682.643% 0QYR 1567.5 0.0% 0QYP 439.3701 -2.9016% 0RUK None None% 0RYA 1597.0 1.2682% 0RIH 195.55 0.0% 0RIH 191.4 -2.1222% 0R1O 225.5 9683.0803% 0R1O None None% 0QFP 10475.8496 107.8542% 0M2Z 252.573 0.2373% 0VSO 33.0 -7.3164% 0R1I None None% 0QZI 622.0 0.0% 0QZ0 220.0 0.0% 0NZF None None% 0YXG 222.05 -4.1318%
Sage Group PLC (LON: SGE)
Sage Group PLC (LON: SGE) is an FTSE 100-listed Company engaged in providing business software and solution across North America, North Europe, Central Europe, Africa, the Middle East, Asia, and Latin America. The primary focus of the Company is to provide accounting services for mid-scale and small-scale companies. SGE’s products can be bifurcated into two broader categories – Cloud-connected & hybrid solutions and Cloud-native solutions.
On 13 May 2022, the Company will release H1 FY22 financial results for the six months ended 31 March 2021.
Recent trend of dividend payments
SGE had paid a final dividend of 11.63 pence per share attributable for FY21 on 10 February 2022, while the ex-dividend date was 13 January 2022. Thus, the full-year FY21 dividend came out to be 17.68 pence per share, an 2.50% increase on a YoY basis.
(Data Source: LSE Website, Research done by Kalkine Group)
Growth Prospects
Key Risks
Key Fundamental and Shareholders Statistics of Sage Group PLC.
BlackRock Institutional Trust Company, N.A., is the most significant shareholder as it holds nearly 62.68 million shares as of 31 December 2021.
Trading Update (for the three months ended 31 December 2021 as of 26 January 2022)
(Source: Company Filings)
FY21 Financial Highlights (for the 12 months ended 30 September 2021 as of 26 January 2022)
(Source: Company Filings)
Financial Ratios (FY21)
Share Price Performance Analysis
(Source: Refinitiv, Research done by Kalkine Group)
On 18 February 2022 at 11:40 AM GMT, SGE’s shares were trading at GBX 677.40, down by around 1.14% against the previous day closing price. Stock 52-week High and Low were GBX 862.20 and GBX 562.00, respectively.
On a daily chart, the stock price is sustaining between the lower Bollinger band and middle Bollinger band. Hence, there could be an uptick in the stock price in the near term. Also, the 14-RSI at around 27.70 indicates that the stock is trading in the oversold territory, which suggest trend reversal in the near term. Meanwhile, the MACD line has given a bullish crossover against the signal line, illustrating a bullish price momentum.
SGE’s stock has delivered a decent positive return of ~14.93% over the last one year. Also, it has outperformed the FTSE All-share Software & Computer Services Index with a return of negative 6.24% and the FTSE 100 index with a return of around 12.32%.
Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)
Business Outlook
SGE witnessed robust demand for Sage Business Cloud solutions, which resulted in higher recurring revenue during the first quarter of the financial year 2022. Moreover, SGE demonstrated robust growth in cloud-native revenue through the acquisition of new customers. Meanwhile, in terms of revenue guidance, the Company had anticipated FY22 organic recurring revenue growth ranging from around 8% to 9%. Overall, the delivery of strategic objectives would bring recurring revenue growth, new customer acquisition, operational efficiencies, and SGE is well-positioned to capture future growth opportunities.
Considering the recent technological advancements, decent dividend growth, robust fundamentals, and support from the valuation as done using the above method, we have given a “BUY” recommendation on Sage Group PLC at the current price of GBX 677.40 (as of 18 February 2022 at 11:40 AM GMT), with lower-double digit upside potential based on 30.32x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).
Note 1: The reference data in this report has been partly sourced from REFINITIV.
Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.
Note 3: Dividend Yield may vary as per the stock price movement.
Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.
Technical Indicators Defined: -
Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.
Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.
Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.
Disclaimer
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