Intrinsic value of SAP ADR - SAP

Previous Close

$114.28

  Intrinsic Value

$84.34

stock screener

  Rating & Target

sell

-26%

Previous close

$114.28

 
Intrinsic value

$84.34

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of SAP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 141.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.11
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.69
  4.72
  4.75
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
  4.91
  4.92
  4.93
  4.94
  4.94
  4.95
  4.95
Revenue, $m
  23,285
  24,216
  25,209
  26,266
  27,387
  28,577
  29,837
  31,170
  32,580
  34,069
  35,640
  37,298
  39,046
  40,888
  42,828
  44,871
  47,023
  49,287
  51,669
  54,175
  56,810
  59,582
  62,496
  65,559
  68,779
  72,163
  75,719
  79,456
  83,383
  87,508
  91,842
Variable operating expenses, $m
 
  7,263
  7,460
  7,670
  7,892
  8,128
  8,378
  8,643
  8,922
  9,217
  9,529
  7,398
  7,744
  8,110
  8,495
  8,900
  9,326
  9,776
  10,248
  10,745
  11,268
  11,817
  12,395
  13,003
  13,642
  14,313
  15,018
  15,759
  16,538
  17,356
  18,216
Fixed operating expenses, $m
 
  11,340
  11,623
  11,914
  12,211
  12,517
  12,830
  13,150
  13,479
  13,816
  14,162
  14,516
  14,879
  15,250
  15,632
  16,023
  16,423
  16,834
  17,255
  17,686
  18,128
  18,581
  19,046
  19,522
  20,010
  20,510
  21,023
  21,549
  22,087
  22,639
  23,205
Total operating expenses, $m
  17,865
  18,603
  19,083
  19,584
  20,103
  20,645
  21,208
  21,793
  22,401
  23,033
  23,691
  21,914
  22,623
  23,360
  24,127
  24,923
  25,749
  26,610
  27,503
  28,431
  29,396
  30,398
  31,441
  32,525
  33,652
  34,823
  36,041
  37,308
  38,625
  39,995
  41,421
Operating income, $m
  5,420
  5,613
  6,126
  6,682
  7,284
  7,932
  8,629
  9,377
  10,178
  11,035
  11,949
  15,385
  16,423
  17,528
  18,702
  19,949
  21,273
  22,678
  24,166
  25,744
  27,415
  29,183
  31,055
  33,034
  35,127
  37,340
  39,678
  42,148
  44,757
  47,512
  50,421
EBITDA, $m
  6,758
  8,282
  8,803
  9,368
  9,979
  10,638
  11,346
  12,105
  12,919
  13,788
  14,716
  15,705
  16,758
  17,879
  19,070
  20,335
  21,677
  23,101
  24,610
  26,209
  27,903
  29,695
  31,591
  33,597
  35,718
  37,960
  40,329
  42,831
  45,474
  48,264
  51,210
Interest expense (income), $m
  201
  238
  262
  288
  315
  344
  374
  407
  441
  477
  516
  556
  599
  644
  692
  742
  794
  850
  908
  969
  1,034
  1,102
  1,173
  1,248
  1,327
  1,410
  1,498
  1,589
  1,685
  1,787
  1,893
Earnings before tax, $m
  5,133
  5,376
  5,864
  6,395
  6,969
  7,588
  8,255
  8,971
  9,737
  10,557
  11,433
  14,828
  15,824
  16,883
  18,010
  19,208
  20,479
  21,828
  23,258
  24,774
  26,381
  28,081
  29,881
  31,786
  33,800
  35,930
  38,181
  40,559
  43,072
  45,726
  48,528
Tax expense, $m
  1,298
  1,451
  1,583
  1,727
  1,882
  2,049
  2,229
  2,422
  2,629
  2,851
  3,087
  4,004
  4,272
  4,559
  4,863
  5,186
  5,529
  5,894
  6,280
  6,689
  7,123
  7,582
  8,068
  8,582
  9,126
  9,701
  10,309
  10,951
  11,629
  12,346
  13,103
Net income, $m
  3,849
  3,924
  4,281
  4,668
  5,087
  5,539
  6,026
  6,549
  7,108
  7,707
  8,346
  10,825
  11,551
  12,325
  13,147
  14,022
  14,950
  15,934
  16,979
  18,085
  19,258
  20,499
  21,813
  23,204
  24,674
  26,229
  27,872
  29,608
  31,443
  33,380
  35,425

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,114
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  46,731
  44,352
  46,171
  48,105
  50,160
  52,339
  54,647
  57,089
  59,670
  62,397
  65,275
  68,311
  71,512
  74,886
  78,440
  82,182
  86,122
  90,269
  94,632
  99,221
  104,048
  109,124
  114,461
  120,071
  125,968
  132,166
  138,680
  145,524
  152,716
  160,271
  168,210
Adjusted assets (=assets-cash), $m
  42,617
  44,352
  46,171
  48,105
  50,160
  52,339
  54,647
  57,089
  59,670
  62,397
  65,275
  68,311
  71,512
  74,886
  78,440
  82,182
  86,122
  90,269
  94,632
  99,221
  104,048
  109,124
  114,461
  120,071
  125,968
  132,166
  138,680
  145,524
  152,716
  160,271
  168,210
Revenue / Adjusted assets
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
  0.546
Average production assets, $m
  4,257
  4,432
  4,613
  4,807
  5,012
  5,230
  5,460
  5,704
  5,962
  6,235
  6,522
  6,825
  7,145
  7,482
  7,838
  8,211
  8,605
  9,019
  9,455
  9,914
  10,396
  10,903
  11,437
  11,997
  12,586
  13,206
  13,857
  14,540
  15,259
  16,014
  16,807
Working capital, $m
  1,995
  -387
  -403
  -420
  -438
  -457
  -477
  -499
  -521
  -545
  -570
  -597
  -625
  -654
  -685
  -718
  -752
  -789
  -827
  -867
  -909
  -953
  -1,000
  -1,049
  -1,100
  -1,155
  -1,212
  -1,271
  -1,334
  -1,400
  -1,469
Total debt, $m
  8,548
  7,485
  8,216
  8,993
  9,819
  10,695
  11,623
  12,605
  13,642
  14,738
  15,895
  17,116
  18,403
  19,759
  21,188
  22,692
  24,276
  25,943
  27,697
  29,542
  31,482
  33,523
  35,668
  37,924
  40,294
  42,786
  45,404
  48,156
  51,047
  54,084
  57,275
Total liabilities, $m
  18,893
  17,830
  18,561
  19,338
  20,164
  21,040
  21,968
  22,950
  23,987
  25,083
  26,240
  27,461
  28,748
  30,104
  31,533
  33,037
  34,621
  36,288
  38,042
  39,887
  41,827
  43,868
  46,013
  48,269
  50,639
  53,131
  55,749
  58,501
  61,392
  64,429
  67,620
Total equity, $m
  27,838
  26,523
  27,610
  28,767
  29,996
  31,299
  32,679
  34,139
  35,683
  37,313
  39,034
  40,850
  42,764
  44,782
  46,907
  49,145
  51,501
  53,981
  56,590
  59,334
  62,221
  65,256
  68,448
  71,803
  75,329
  79,035
  82,930
  87,023
  91,324
  95,842
  100,589
Total liabilities and equity, $m
  46,731
  44,353
  46,171
  48,105
  50,160
  52,339
  54,647
  57,089
  59,670
  62,396
  65,274
  68,311
  71,512
  74,886
  78,440
  82,182
  86,122
  90,269
  94,632
  99,221
  104,048
  109,124
  114,461
  120,072
  125,968
  132,166
  138,679
  145,524
  152,716
  160,271
  168,209
Debt-to-equity ratio
  0.307
  0.280
  0.300
  0.310
  0.330
  0.340
  0.360
  0.370
  0.380
  0.390
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.490
  0.500
  0.510
  0.510
  0.520
  0.530
  0.530
  0.540
  0.550
  0.550
  0.560
  0.560
  0.570
Adjusted equity ratio
  0.557
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598
  0.598

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,849
  3,924
  4,281
  4,668
  5,087
  5,539
  6,026
  6,549
  7,108
  7,707
  8,346
  10,825
  11,551
  12,325
  13,147
  14,022
  14,950
  15,934
  16,979
  18,085
  19,258
  20,499
  21,813
  23,204
  24,674
  26,229
  27,872
  29,608
  31,443
  33,380
  35,425
Depreciation, amort., depletion, $m
  1,338
  2,668
  2,677
  2,686
  2,696
  2,706
  2,717
  2,728
  2,740
  2,753
  2,767
  320
  335
  351
  368
  386
  404
  423
  444
  465
  488
  512
  537
  563
  591
  620
  651
  683
  716
  752
  789
Funds from operations, $m
  3,163
  6,593
  6,958
  7,354
  7,783
  8,245
  8,743
  9,277
  9,848
  10,460
  11,113
  11,145
  11,887
  12,676
  13,515
  14,407
  15,354
  16,358
  17,423
  18,551
  19,746
  21,011
  22,350
  23,767
  25,265
  26,849
  28,522
  30,291
  32,159
  34,132
  36,215
Change in working capital, $m
  -1,721
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
Cash from operations, $m
  4,884
  6,607
  6,973
  7,371
  7,801
  8,264
  8,763
  9,298
  9,871
  10,484
  11,138
  11,172
  11,915
  12,706
  13,547
  14,440
  15,388
  16,394
  17,461
  18,591
  19,788
  21,056
  22,397
  23,816
  25,316
  26,903
  28,579
  30,351
  32,222
  34,198
  36,284
Maintenance CAPEX, $m
  0
  -200
  -208
  -217
  -226
  -235
  -246
  -256
  -268
  -280
  -293
  -306
  -320
  -335
  -351
  -368
  -386
  -404
  -423
  -444
  -465
  -488
  -512
  -537
  -563
  -591
  -620
  -651
  -683
  -716
  -752
New CAPEX, $m
  -1,056
  -175
  -182
  -193
  -205
  -218
  -231
  -244
  -258
  -272
  -288
  -303
  -320
  -337
  -355
  -374
  -394
  -414
  -436
  -459
  -482
  -507
  -533
  -561
  -589
  -619
  -651
  -684
  -719
  -755
  -793
Cash from investing activities, $m
  -1,899
  -375
  -390
  -410
  -431
  -453
  -477
  -500
  -526
  -552
  -581
  -609
  -640
  -672
  -706
  -742
  -780
  -818
  -859
  -903
  -947
  -995
  -1,045
  -1,098
  -1,152
  -1,210
  -1,271
  -1,335
  -1,402
  -1,471
  -1,545
Free cash flow, $m
  2,985
  6,233
  6,584
  6,961
  7,370
  7,811
  8,287
  8,798
  9,345
  9,931
  10,558
  10,562
  11,274
  12,033
  12,840
  13,698
  14,609
  15,576
  16,601
  17,688
  18,840
  20,060
  21,352
  22,718
  24,164
  25,692
  27,308
  29,016
  30,821
  32,726
  34,739
Issuance/(repayment) of debt, $m
  -1,478
  690
  731
  778
  826
  876
  928
  982
  1,038
  1,096
  1,157
  1,221
  1,287
  1,356
  1,429
  1,505
  1,584
  1,667
  1,754
  1,845
  1,940
  2,041
  2,145
  2,255
  2,371
  2,492
  2,618
  2,751
  2,891
  3,037
  3,191
Issuance/(repurchase) of shares, $m
  28
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,401
  690
  731
  778
  826
  876
  928
  982
  1,038
  1,096
  1,157
  1,221
  1,287
  1,356
  1,429
  1,505
  1,584
  1,667
  1,754
  1,845
  1,940
  2,041
  2,145
  2,255
  2,371
  2,492
  2,618
  2,751
  2,891
  3,037
  3,191
Total cash flow (excl. dividends), $m
  1,761
  6,922
  7,315
  7,739
  8,196
  8,687
  9,215
  9,779
  10,383
  11,028
  11,715
  11,783
  12,561
  13,389
  14,269
  15,202
  16,193
  17,243
  18,355
  19,533
  20,781
  22,101
  23,497
  24,974
  26,535
  28,184
  29,927
  31,768
  33,712
  35,764
  37,930
Retained Cash Flow (-), $m
  -3,281
  -1,046
  -1,087
  -1,157
  -1,229
  -1,303
  -1,380
  -1,460
  -1,544
  -1,631
  -1,721
  -1,816
  -1,914
  -2,017
  -2,125
  -2,238
  -2,356
  -2,480
  -2,609
  -2,745
  -2,887
  -3,035
  -3,191
  -3,355
  -3,526
  -3,706
  -3,895
  -4,093
  -4,301
  -4,518
  -4,747
Prev. year cash balance distribution, $m
 
  2,361
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  8,237
  6,227
  6,582
  6,967
  7,384
  7,834
  8,319
  8,839
  9,397
  9,994
  9,967
  10,647
  11,372
  12,144
  12,964
  13,837
  14,763
  15,746
  16,789
  17,894
  19,065
  20,306
  21,619
  23,008
  24,478
  26,032
  27,675
  29,411
  31,245
  33,183
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,898
  5,701
  5,728
  5,737
  5,724
  5,686
  5,620
  5,525
  5,398
  5,239
  4,733
  4,543
  4,324
  4,077
  3,806
  3,516
  3,212
  2,900
  2,585
  2,274
  1,972
  1,685
  1,417
  1,172
  952
  759
  594
  455
  341
  250
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

SAP SE (SAP) is a software and service provider. The Company offers enterprise application software. The Company operates through two segments: Applications, Technology & Services segment, and the SAP Business Network segment. The Applications, Technology & Services segment is engaged in the sale of software licenses, subscriptions to its cloud applications, and related services (primarily support services and various professional services, and support services, as well as implementation services of its software products and education services on the use of its products). The SAP Business Network segment includes its cloud-based collaborative business networks and services relating to the SAP Business Network (including cloud applications, professional services and education services). Within the SAP Business Network segment, the Company markets and sells the cloud offerings developed by SAP Ariba, SAP Fieldglass and Concur.

FINANCIAL RATIOS  of  SAP ADR (SAP)

Valuation Ratios
P/E Ratio 35.6
Price to Sales 5.9
Price to Book 4.9
Price to Tangible Book
Price to Cash Flow 28
Price to Free Cash Flow 35.8
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 57.4%
Cap. Spend. - 3 Yr. Gr. Rate 12.1%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 24.4%
Total Debt to Equity 30.7%
Interest Coverage 27
Management Effectiveness
Return On Assets 8.8%
Ret/ On Assets - 3 Yr. Avg. 9%
Return On Total Capital 10.9%
Ret/ On T. Cap. - 3 Yr. Avg. 11.1%
Return On Equity 14.7%
Return On Equity - 3 Yr. Avg. 15.8%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 72%
Gross Margin - 3 Yr. Avg. 71.4%
EBITDA Margin 28.7%
EBITDA Margin - 3 Yr. Avg. 28.7%
Operating Margin 23.3%
Oper. Margin - 3 Yr. Avg. 22.8%
Pre-Tax Margin 22%
Pre-Tax Margin - 3 Yr. Avg. 22%
Net Profit Margin 16.5%
Net Profit Margin - 3 Yr. Avg. 16.6%
Effective Tax Rate 25.3%
Eff/ Tax Rate - 3 Yr. Avg. 24.5%
Payout Ratio 37.8%

SAP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SAP stock intrinsic value calculation we used $23285 million for the last fiscal year's total revenue generated by SAP ADR. The default revenue input number comes from 2016 income statement of SAP ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SAP stock valuation model: a) initial revenue growth rate of 4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for SAP is calculated based on our internal credit rating of SAP ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of SAP ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SAP stock the variable cost ratio is equal to 30.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11063 million in the base year in the intrinsic value calculation for SAP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for SAP ADR.

Corporate tax rate of 27% is the nominal tax rate for SAP ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SAP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SAP are equal to 18.3%.

Life of production assets of 21.3 years is the average useful life of capital assets used in SAP ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SAP is equal to -1.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $27838 million for SAP ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1237.35 million for SAP ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of SAP ADR at the current share price and the inputted number of shares is $141.4 billion.

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COMPANY NEWS

▶ SAP says one-off item to reduce 2017 tax bill   [Dec-15-17 07:30AM  Reuters]
▶ Approach SAP With Caution   [Dec-14-17 09:34AM  TheStreet.com]
▶ A Look At SAP's 2017 So Far   [Dec-08-17 02:15PM  Forbes]
▶ Why You Should Buy Microsoft Corporation Stock on the Dip   [Dec-06-17 02:37PM  InvestorPlace]
▶ SAP Ariba Fuels Procurement with Purpose   [Nov-30-17 08:30AM  Business Wire]
▶ SAP Investor Presentation in December 2017   [Nov-29-17 11:35AM  PR Newswire]
▶ Microsoft, SAP Expand Cloud Computing Partnership   [04:00PM  Investor's Business Daily]
▶ 3 Pros, 3 Cons for International Business Machines Corp.   [Nov-27-17 11:17AM  InvestorPlace]
▶ EY Strategic Growth Forum 2017   [Nov-14-17 12:41PM  Yahoo Finance Video]
▶ EY Strategic Growth Forum 2017   [12:27PM  Yahoo Finance Video]
▶ International Business Machines Is a Sleeping Cloud Giant   [Nov-08-17 10:07AM  InvestorPlace]
▶ ETFs with exposure to SAP SE : November 7, 2017   [Nov-07-17 10:42AM  Capital Cube]
▶ Square Partners With SAP: What Investors Need to Know   [Nov-06-17 07:26PM  Motley Fool]
▶ (ADP) Who are ADP's Main Competitors?   [10:48AM  Investopedia]
▶ Under Armour Links Sales Decline to Software Upgrade   [Oct-31-17 09:42PM  The Wall Street Journal]
▶ Procurement Gets Sweeter at Ferrero with SAP Ariba   [Oct-24-17 08:30AM  Business Wire]
▶ SAP Quarterly Earnings Beat Estimates, Revenue Outlook Raised   [04:02PM  Investor's Business Daily]
▶ SAP tops Street 3Q forecasts   [07:02AM  Associated Press]
▶ [$$] SAP Raises Guidance As Profits Rise   [01:39AM  The Wall Street Journal]
▶ [$$] These Companies Will Pay You to Learn Your Job   [12:03AM  The Wall Street Journal]
▶ [$$] These Companies Will Pay You to Learn Your Job   [09:00AM  The Wall Street Journal]
▶ These Companies Will Pay You to Learn Your Job   [09:00AM  The Wall Street Journal]
Financial statements of SAP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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