The Sage Share Discussion Threads

[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.

[nhb001] 16/6/2023 12:35

Yep. Looking good so far. Large volumes of late as well.

[maddox] 16/6/2023 08:19

Looks like we've hit two new highs in the last three days - 881.20p today so maintaining strength.

[maddox] 06/6/2023 22:13

Hi nhb,

Well we've negotiated the xd and hit yet another high today at 877.2 so the uptrend is maintained.

[nhb001] 01/6/2023 06:27

Hello Maddox. This is true and nice to see but I suspect we may retrace a little from here. Today Sage goes ex-dividend and the price action recently has been a spike before and a retrace afterwards. I would be happy to be proved wrong though!

[maddox] 31/5/2023 22:21

we're hitting repeated highs - latest print 872p. We should be attracting the attention of momentum traders - perhaps we'll have some new posters joining the thread.

btw wad - what do you have as the all-time-high?

[wad collector] 19/5/2023 16:38

Almost back to the heady prices of 2002.
I like the hypothesis that rising customer costs encourage the use of more efficient accounting software.

[maddox] 19/5/2023 13:37

Hi Justiceforthemany,

All good points - but Sage has a highly resilient business model that can support the debt which is only 1.3x EBITDA and has respectable Piotroski F-Score of 6 and Altman Z2-Score of 4.5. So, pretty typical and not of much concern.

Accounting software isn't a discretionary purchase for most businesses. Once, you've purchased it - got all your figures into it - you're unlikely to switch. Closure, bankruptcy and liquidation is the greater risk for losing a customer - and little sign of this in the last SGE results: Renewal by value at 101% and £190m of the £222m increase in ARR came from new customers.

Talking of trends - as I post, we're breaking to new highs, and hopefully breaking out from the sideways tunnelling.

Regards Maddox

[justiceforthemany] 19/5/2023 12:38

To add have a look at the balance sheet. Not good.
£2.2Bn a hefty chunk of their assets is 'goodwill'
Debt to equity is 2x
Anyway this market is psychotic and irrational, all about the trend so could go up another 10% or so but the downside is substantial.

[maddox] 19/5/2023 12:10

The Chronic Investor IC 19 May 2023 Buy. 'Sage could be a counter-cyclical buy'

'Rather than just pushing back against the cyclical story, the top-line growth suggests that Sage could actually be a counter-cyclical story. Its momentum in the face of current challenges means the 2024 price/earnings ratio of 23.2 isn’t off-putting. We stick to buy.'

They also highlight the Cloud-native ARR grows at 30% driven in part by the performance of Sage Intacct.

[maddox] 18/5/2023 19:35

Opps, sorry Amigos posted this on the wrong thread - reposting for continuity.

Very strong 1H23 results today (17 May 23) as the underlying Business Cloud growth breaks through to dictate the top-line results. Highlights:

>> +12% Organic Annualised Recurring Revenue (ARR);

>> Operating margin increasing by 60 basis points to 20.8%;

>> Cash conversion 117%; and

>> 101% Renewal by value.

The star of the show is Sage Intacct which is growing at 30% in the highly competitive US market - and now rolling-out in other geographies. This product is clearly winning new customer acquisition. The widening Op Margin is really good news - and this is expected to continues as SGE focus on growing revenue faster than costs. This will magnify the growth at the bottom-line profit/ eps level translated from the the top-line growth.

No sign of macro economic or competitive factors impacting progress with 101% renewal by value - with some sub-inflation price increases included. The overall goal for SGE is to deliver 'consistent double-digit growth' with a target of 11% for full FY23.

[maddox] 17/5/2023 23:07

Hi justiceforthemany,

Nop not cheap. If your looking for cheap - SGE is never 'cheap'.

However, that doesn't make SGE a bad investment - if growth accelerates and its margins widen, as appears to be occurring, then it might be very good value at 842.8p (up 21.8p 2.66% today from 821p).

My assessment is that SGE's painful transition is largely complete and they'll deliver the promised sustained double digit growth, that with widening margins, will propel the earnings per share forward and will throw off cash. If this occurs 842p will look cheap looking back and deserving of its premium rating.

Looking forward to see how the next few results go - that should confirm the growth trajectory or not.

[justiceforthemany] 17/5/2023 16:52

A P/E of almost 30, is that supposed to be cheap?
No thanks.
Cisco trades at just 10x earnings which means Sage should be nearer 300p
Market is truly insane. Forget fundamentals just follow the sentiment until something breaks or a broker discovers his conscience....
Strong sell

[nhb001] 17/5/2023 08:42

You beat me to it Maddox :-)) Very positive investor presentation just ended. I wish all my holdings were looking as good.

[maddox] 17/5/2023 08:25

Very strong 1H23 results today as the underlying Business Cloud growth breaks through to dictate the top-line results. Highlights:

>> +12% Organic Annualised Recurring Revenue (ARR);

>> Operating margin increasing by 60 basis points to 20.8%;

>> Cash conversion 117%; and

>> 101% Renewal by value.

The star of the show is Sage Intacct which is growing at 30% in the highly competitive US market - and now rolling-out in other geographies. This product is clearly winning new customer acquisition. The widening Op Margin is really good news - and this is expected to continues as SGE focus on growing revenue faster than costs. This will magnify the growth at the bottom-line profit/ eps level translated from the the top-line growth.

No sign of macro economic or competitive factors impacting progress with 101% renewal by value - with some sub-inflation price increases included. The overall goal for SGE is to deliver 'consistent double-digit growth' with a target of 11% for full FY23.

[maddox] 21/4/2023 13:59

I'm a big fan of Terry Smith - he's an exceptionally smart investor. He took advantage of SGE's share buy-back programme to exit his position - which was a bit of an invitation to sell - considering they already had SGE under review. Nevertheless, he appears to have sold at prices below 650p (RNS 17Jan21 share price c.560p below 5% - May 2021) so at a pretty low point. At the time he did say that he felt INTU was the better firm in the sector.

Perhaps he'll have another look at the new-look SGE before he has to overpay? (Don't overpay is his second rule for investment)

[nhb001] 19/4/2023 11:45

...and yet TS sold Sage to buy INTU so we are told.?

[maddox] 19/4/2023 06:48

Much talk about the valuation anomaly between US and UK.

Looking at a side-by-side of SGE 797p versus Intuit Inc (Quick Books) $442.59. In the UK SGE is considered highly valued on a p/e of 25 whereas Intuit is on an eye-watering p/e 64. Similarly, SGE is priced at 4.15x revenue versus 9x for Intuit.

If SGE was valued on INTU's p/e the share price would be 2040p or 1800p on INTU's revenue multiple.

I note that Terry Smith's Fundsmith has sold-out of INTU - he disapproves of their accounting treatment of Share-based remuneration and thinks that they have overpaid for Mailchimp. Intuit paid 12x revenue!

So, UK 'highly valued' firms look extremely cheap from a US perspective.

[maddox] 17/4/2023 12:37

Reading the runes - a few indications that SGE's business transformation is largely complete. The presentation of accounts has been revamped to give 'greater emphasis to underlying revenue and profit measures'. Accompanying this, the cloud-based SaaS firm supporting small and mid-sized company's digitisation needs has had a face-lift with a jazzy new branding, sports sponsorships and a load more awareness building advertising.

Then looking at the rns history there has been some chunky insider share purchases indicating internal confidence in the outlook.

My crystal ball is telling me to expect an up-beat set of results and outlook.

[maddox] 14/4/2023 12:38

Hi Wad,

We'll have SGE 1H23 results on the 17 May - what are your thoughts - do you remain sceptical?

Seeing the Sage brand and advertising far more prominently these days - it'll be interesting to see how the new customer acquisition is performing.

[wad collector] 03/2/2023 20:41

IC tipped today as their IT outsider in the FTSE350 review though it points out that the forward PE of 24 is pricy and that the small and midsized businesses that it has targeted are more vulnerable to the downturn.