The Sage Share Discussion Threads

[amt] 29/3/2021 06:44

Essential Investor. EPS almost doubled in ten years and pe of 21.
I think you need to work harder on your analysis.
Hardly a chunky pe and definitely not slow growth.

[nhb001] 21/3/2021 11:49

Sage's cloud customers are located on Microsoft Azure are they not?

[spacecake] 20/3/2021 09:21

TV ad last night, first one I have seen in ages, far better use of cash than buying back shares IMO. HQ on the move again moving from Gosforth great park to Cobalt business park. On the same site is what used to be called cobalt data centre, now called Stellium -
It's interesting to think of Sage's move to the cloud and them moving next to a very large facility (the UK's largest purpose built campus). However, would they want to own their own equipment ?

[essentialinvestor] 17/3/2021 16:02

Sage has been low growth for 10 years.

However it remains on a chunky forward multiple.

Question is, can they reignite growth?.

[spacecake] 17/3/2021 15:58

The share price is below where it was 5 years ago, the customer move to cloud subscription model is slow, very slow.
Buying back shares to stuff into the company treasury so that they can redistribute them to themselves though option schemes ain't going to fix anything.

[nhb001] 17/3/2021 15:04

It's getting a right kicking today.

[nhb001] 16/3/2021 07:41

My thoughts are I hope you are right!?

[maddox] 15/3/2021 23:23

Whether buy-backs really make sense for shareholders depends on two critical points, specifically:

aa> The shares repurchased must be trading at a price below their intrinsic value; AND,

bb> There is no better internal use of the cash that would generate a higher return.


A very timely analysis just appeared on Yahoo Finance by Simply Wall Street:



They've produced a DCF valuation of SGE. Based on their combining of broker forecasts and their own future projections they calculate the current fair value share price of SGE to be 731p - so a 21.3% premium to today's close of 587.8p.

This suggests that yes, the buy backs are being purchased at below intrinsic value. But there is still the second test: Is there better internal use of the cash?

The rationale for this second question is that in handing back the cash to shareholders they will then need to find a new investment. In making a new investment an external investor will almost certainly be buying in at a premium whereas a firm's internally recycled cash is invested at par value. So it makes better sense to re-invest it rather than return it.

SGE has already been making additional investments in its products, its cloud infrastructure and its marketing; also it doesn't appear to need any further bolt-on acquisitions to round-out its product set. Quite the reverse, it has been divesting its geographic implementation capability as it moves towards a local partner model. It has also sold-off its non-core activities such as payment acquiring (SagePay). SGE therefore does appear to have surplus cash that the best use of which is to buy back its own shares that are trading below current intrinsic value.

There is of course a potential kicker here, if that current intrinsic value calc doesn't reflect the improving prospects from SGE's transformation. The current buy-back programme might also signal that SGE's transformation investment cycle is at an end and management are now looking towards future organic growth returning, which is not reflected in the current share price.

So, what are your thoughts?

Regards Maddox

[bengrady] 09/3/2021 17:27

Thanks Binky, Many thanks for your reply. I was hoping your reply would be along the lines of your reply.

[b1nky] 09/3/2021 15:12

Bengrady. Apologies just seen your question. Yes. Same calculation. If they are held in treasury. The free float goes down. Basically less shares floating around squeezes the price up over time. All other things being equal, of course!

[nhb001] 09/3/2021 09:14

Do you have a link you can share to those positive reviews? Thanks

[bengrady] 07/3/2021 16:40

Binky, the announcement says that the bought back shares will be held in treasury meaning they will not be cancelled. Does your calculation of the increase in share price apply in this case as the number of shares in issue is not being reduced?

[davwal] 05/3/2021 08:02

Well they aren’t hanging about. It'll be nice getting the regular rns confirming recent trading volumes of the buy back.

[maddox] 04/3/2021 21:32

Thanks binky, much appreciated.

[contrarian joe] 04/3/2021 19:43

Sage Group PLC Share buyback programme
04/03/2021 7:11am
UK Regulatory (RNS & others)

Sage (LSE:SGE)
Intraday Stock Chart

Thursday 4 March 2021

Click Here for more Sage Charts.
TIDMSGE

RNS Number : 1585R

Sage Group PLC

04 March 2021

Share buyback programme

4 March 20 21

The Sage Group plc ("Sage" or the "Group") today announces that it is commencing a share buyback programme of up to GBP300 million. The programme will run from 4 March 2021, and is expected to end no later than 4 September 2021.

The share buyback programme is consistent with the Group's disciplined approach to capital allocation, and reflects the sale proceeds from recent disposals and strong ongoing cash generation. The Group continues to have considerable financial flexibility to drive the execution of its growth strategy, supported by its robust financial position.

Further details of the share buyback programme are set out below.

This announcement contains inside information. The person responsible for making this announcement on behalf of Sage is Vicki Bradin (Company Secretary).

Enquiries

The Sage Group plc [phone]

James Sandford, Investor Relations

Amy Lawson, Media

FTI Consulting [phone]

Charles Palmer

Dwight Burden

Further details of the share buyback programme

Sage has entered into a non-discretionary arrangement with Morgan Stanley & Co. International plc in relation to the purchase by Morgan Stanley, as principal, of ordinary shares of Sage (the "Shares"), and intends to enter into a similar arrangement with J.P. Morgan Securities plc (together with Morgan Stanley, the "Brokers") for the latter half of the buyback period.

The Brokers will make trading decisions in relation to Shares purchased under the buyback programme independently of, and uninfluenced by, Sage. The Brokers will make a simultaneous on-sale of such Shares to Sage, and all Shares repurchased will be held in treasury and used to meet obligations arising from share option programmes, or other allocations of shares, to employees or directors.

Any purchases of Shares contemplated by this announcement will be carried out on the London Stock Exchange and/or other recognised investment exchange(s), and will be effected within certain pre-set parameters. These arrangements are in accordance with Sage's general authority to repurchase up to 109,355,465 Shares granted at its 2021 Annual General Meeting, Chapter 12 of the Listing Rules, and those provisions of Article 5(1) of Regulation (EU) No. 596/2014 (as incorporated into UK domestic law by the European Union (Withdrawal) Act 2018) and the Commission Delegated Regulation (EU) 2016/1052 (as incorporated into UK domestic law by the European Union (Withdrawal) Act 2018) dealing with buyback programmes.

ENDS

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

POSGZGGFNDRGMZG

(END) Dow Jones Newswires

March 04, 2021 02:11 ET (07:11 GMT)

[b1nky] 04/3/2021 17:30

Maddox. I would expect 25%. ie as it's a slightly larger percentage than the norm, I would, normally, expect a greater return.

[maddox] 04/3/2021 17:23

Hi binky,

Welcome aboard. SGE is buying back up to 4.7% of its Mkt Cap. Using your historical analysis, and with an obvious healthy degree of scepticism, what would that deliver - the 22% you mention, more or less?

Regards Maddox

[mellorscarthwaite] 04/3/2021 16:02

Budget new TAX relief on Investments
Surely cloud software a winner

[b1nky] 04/3/2021 15:00

Having followed companies that do buybacks for several years now. On average, depending on buyback amount as a percentage of market cap, the share price increases 22% over the period. ie from day one when it is announced to the last day, once it has been concluded.This is for information purposes only. I have entered a long position today. GLA

[maddox] 04/3/2021 13:53

Once an impression gets stuck in people's minds it is virtually impossible to shift it. What was once true of Sage is true no longer. The business has slimmed-down, focused and undergone a significant transformation and yet the accepted wisdom is that it's the same old packed software pusher.

Once the beautiful butterfly emerges from the chrysalis will it still be seen as a dowdy moth?

[davwal] 04/3/2021 13:18

I’m expecting a steady increase in share value after the announcement of the buy-back coupled with investors seeking growth opportunities from what is a diminishing pool of stocks that haven’t yet been thrashed to death.
As for Sage being a possible dinosaur, I’d say unlikely - very unlikely... not the most exciting around, but it has a strong future.

[chillpill] 04/3/2021 07:26

So today Xero announce an acquisition and Sage are buying more shares back.

My worry is Sage is becoming a dinosaur....I am a complete outsider looking in but the world is moving on and is Sage going to be around in 10 years will life pass them by?

[davethehorse] 26/2/2021 19:26

Big drop over the week?