Sage Share Discussion Threads

[maddox] 22/11/2023 12:17

Yep, we've blasted through the Brokers' Consensus share price target of 1016p. As I post we're at 1128.5p up 131.3p (13%). The Brokers have been way behind Mr Market on SGE - they don't appear able to shake-off their previous perceptions of SGE as an old on-premise perpetual licence underperformer.

Interesting reaction - Mr Market has recently not responded to good results. Perhaps market sentiment is changing? Let's see how much of this gain is retained.

[nhb001] 22/11/2023 11:23

I think it's fair to say the market likes those results. :-))

[maddox] 22/11/2023 08:48

Excellent results - the transformation is now clear to anyone that cares to look. The share price has run-up in advance but it looks like these results are good enough to justify the valuation. Against a pretty grim market back drop it's very pleasing to see the performance SGE is achieving.

Highlights
>> Underlying recurring revenue increased by 12% to £2,096m;
>> Margin increasing by 140 bps to 20.9% (constant currency);
>> Underlying basic EPS increased by 22% to 32.3p;
>> Cash conversion of 116%;
>> Final dividend of 12.75p, increasing the full year dividend by 5% to 19.3p;
>> Share buyback programme of up to £350m announced.

SGE have a clear winner with SGE Intacct and are aggressively rolling out geographically as well as investing in developing tailored versions for specific market verticals - for manufacturing, construction etc.

The successful transformation to a SaaS business is clear in the metrics:

>> Renewal rate by value of 102% (FY22: 101%), ahead of last year driven by more sales to existing customers and retention.
>> Sage Business Cloud penetration of 84% (FY22: 75%);
>> Subscription penetration of 79% (FY22: 75%).

Really good to see this strong underpinning that is hugely attractive.

With high quality recurring revenue; evident pricing power; growing operating margins; generating surplus cash and new customer acquisition growth - these are very impressive results.

[mellorscarthwaite] 09/9/2023 10:00

Then select download pdf

(Available without subscription)

[maddox] 07/9/2023 10:21

Thanks BH - it looks like Advfn are disallowing sharing the live link.

Looks like we've broken through 1000p this morning.

[nhb001] 06/9/2023 20:02

Thanks bh for sharing that link. Nice to see the reason for the surge today. It seems that a general consensus is forming that Sage now has the market leading product in Intacct. They bought Intacct way back in 2017 and it's taken an age to get to this point but it seems as if they are about to reap the rewards.

[bountyhunter] 06/9/2023 17:50

Maddox - thanks for the pointer - not perfect but this is the link, just cut and paste into a browser to access it..

Sharecast.com/news/broker-recommendations-/broker-tips-sage-bm-darktrace--14609134.html

[maddox] 06/9/2023 16:04

Hi Jon,

Welcome aboard. Yes, Sage have suffered from an image problem - which once formed in people's minds - is very difficult to change. Admittedly the SaaS and Cloud transitions has been a long-haul as has exiting country business units, old products and business lines (payment acquisition). But opinions on SGE are changing and that is clearly being reflected in the share price.

As JPM point out SGE Intacct is an important growth engine - it's been a big success in the US market - and this growth should accelerate as it rolls out to other geographies.

(Closed 990.40p +17.40 +1.79% new 52wk closing high).

[1968jon] 06/9/2023 14:35

I own a bloody great chunk of these but have not been on here as I had not seen recent posts before. I will not be a frequent poster but possibly join in occasionally.
My take, having owned them and been very aware of them for a good few years. Goodness me they are not/have not been seen as cool/exciting by the city for forever. Possibly (definitely) viewed as a bit parochial and old school with a sniffiness about their ability to transition from legacy stuff to the cloud.
I have hoped that these notions would eventually change. Who knows what price they should be and I note some posters comments on their considered high P/E ratio. Equally the comments referencing the valuation of Intuit.
Talking my book, I am more interested in their EV/EBITDA ratio at about 20x. European private equity accounting software/SAAS companies are sometimes/often marked at 30+x.
Doesn't mean that is where they should be but I would be surprised if during the dog days of 2022 some large shops were not looking at a takeout. Pay a 20/30% per share premium and have an instant 50% uplift on the new NAV mark.
It would be a mega deal now and I have no insight but either some marks have to come down or their share price can continue to rally (I hope)

[maddox] 06/9/2023 11:46

Sharecast report

'JP Morgan has placed Sage on its "positive catalyst watch" ahead of the accounting software group's fourth-quarter results in November, where it expects to see solid growth with its cloud finance offering Intacct.

The bank reiterated its 'overweight' rating on the stock with a 1,100p target price.'

[...] [Unfortunately the pasted link is edited out]

[maddox] 29/8/2023 16:22

Another strong day - hit 974p before closing at yet another High 972p on above average volume. It'd be nice to see an RNS to see who's accumulating.

[maddox] 27/8/2023 22:59

Agreed Wad, It's been hitting repeated highs - that against this market backdrop is very positive. Somewhat perplexing is that the Brokers Analyst consensus share price target is 963.85p which we've already exceeded with an intra-day high of 665.60p. So, whilst the Brokers' consensus has now moved overwhelmingly to Buy/Strong Buy they are keeping their share price targets low.

[wad collector] 27/8/2023 13:58

Nice to see something in my portfolio that is at an ATH. Stands alone in mine!
Sadly didn't buy enough.

[nhb001] 10/8/2023 15:39

That's a nice article. Thanks for posting Maddox.

[maddox] 09/8/2023 12:56

Positive write-up in Investors Chronicle:



Comments positively on recent trading and growth in recurring revenue. Picks-out the success of Intacct especially in North America and Peel Hunt sees this as the main driver as it rolls-out Intacct into Europe. Mentions that investors are now seeing the value in SGE driving the valuation upto a p/e 27 - describes this as reaching the level of US peers [hardly - Intuit is on a p/e 63!].

Sage would be on a price of 2216p if rated similarly to Intuit.

[maddox] 27/7/2023 10:28

Q3 nine month update today. Growth is continuing and on-track for FY23 of 10% growth overall. No impact seen from macro-economic factors - interest rates/inflation.
The renewal rate is 101% consistent with past 18 months indicating a stable competitive environment.

Looking beneath the headline numbers - there are some positive growth drivers building momentum. Intacct US growth 30% and >40% in new territories - albeit from a low base. The launch in Europe has started well and I note Q3 growth was 7% up from 3% at 1H. The Sage Business Cloud organic growth at 28%.

Margins are targeted to rise - with 20.8% for FY23 and to continue widening thereafter. The aim is for SGE to be a 'Rule of 40' SaaS business.

In recent years, Rule of 40 has gained widespread usage as a yard-stick target measure of growth by investors in SaaS firms, first coined by Brad Feld. The Rule of 40 states that if a company's revenue growth rate is added to its profit margin, the total should exceed 40%. No breakdown offered on the mix today - and it'd be very interesting to know what their thoughts are?

The rationale is ofc that a SaaS Rule of 40 firm will command a premium rating, but again not stated, and on a p/e of 27 as mentioned above SGE is already considered highly valued in the context of the UK market.

Post script: Mr Market liked the results - new high 951p

[maddox] 19/7/2023 09:27

To put this undervaluation into context. In the UK SGE is considered highly valued on a p/e 27, however, Intuit (QuickBooks)is on a p/e 62.79 and Xero a p/e of 133.

If Sage was on a p/e similar to Intuit - it's share price would be over £20. Obviously, I'm not suggesting that SGE will valued on a similar p/e to Intuit or Xero anytime soon - it's far more likely that they will come more into line with SGE - particularly if they disappoint.

[maddox] 19/7/2023 07:57

Sage is looking very strong - hitting new highs - yesterday and again today at 947.4p. Positive comments from Nick Train - talking about the undervaluation of UK shares as compared with similar firms internationally:

'Train, who invests in the London Stock Exchange Group, said that the negative sentiment meant there were opportunities to snap up “wonderful companies that are wrongly priced”, citing cloud-software provider Sage as an example.'



and in ii:

'Nick Train is not a value investor, but he argues that his portfolio is cheap.
The stock picker, who runs the UK share portfolios Lindsell Train UK Equity and Finsbury Growth & Income, is known for picking high-quality companies, with established brands that can keep growing profits. He has always been happy to pay a premium price for such shares.

But in his latest note to investors, Train says his portfolio is undervalued compared with similar international companies. He also says that the UK market as a whole is extremely cheap compared to other major stock markets.' 'But he argues that his companies are “outstanding” and priced cheaper, on a P/E basis, than American rivals. “Now, of course these pairs are not exact ‘like-for-likes'; just as Sage Group SGE is not an exact comparator for Intuit Inc INTU'

[the_knight_of_spring] 28/6/2023 11:23

I think it is far more significant than a broker buy recommendation that the Chief Product Officer bought 13,000 shares yesterday at around £8.70 (last day before the close period?). He bought a lot of shares maybe Feb-Apr around £7.60. So instead of taking a 15% or so profit, he has bought even more.

[maddox] 28/6/2023 09:25

It's about time - most Broker's targets have been sitting well below the share price - despite being 'buy' recommendations. Hopefully, this will spur a few more to revise their share price targets upwards.

[maddox] 28/6/2023 09:16

Yep, currently up 34p to 912p a 4.4% jump this morning and nearly half a million traded already against a c. 2.5m average. There is no supportive news as far as I can see and market is pretty dismal more generally - so looks like SGE is gaining some FI fans.

[catch007] 28/6/2023 08:59

JPMorgan raises Sage Group to 'overweight' (neutral) - price target 1,100 (860) pence

[nhb001] 28/6/2023 08:00

Big move this morning.