Most software stocks have soared in price over the past year because the pandemic-induced remote lifestyle forced individuals and businesses to depend on software, particularly cloud-based services. The trend has been continuing this year, with an increasing adoption of advanced software in almost every industry as part of their digital transformation efforts.
According to Grand View Research, the global business software and services market is expected to grow at an 11.3% CAGR between 2021 – 2028.
Given this backdrop, we think it could be wise to scoop up the shares of software stocks SAP SE (SAP – Get Rating) and QAD Inc. (QADA – Get Rating) because of their solid financials and continued innovations. Both names are rated Strong Buy in our POWR Ratings system.
Headquartered in Walldorf, Germany, SAP is a software application company that operates through four segments: Applications, Technology & Support; Concur; Qualtrics; and Services. Its offerings include SAP S/4HANA, SAP Intelligent Asset Management, and its SAP SuccessFactors Human Experience Management Suite.
SAP announced on May 20that it had integrated advanced support into its solutions to deliver the intuitive experience modern business users need with its Built-In Support concept that is based on artificial intelligence (AI) and machine learning (ML)-based technologies. As a result, the company could witness increasing demand for its solution.
SAP’s non-IFRS cloud revenue increased 7% year-over-year to €2.15 billion ($2.54 billion) for its fiscal first quarter, ended March 31, 2021. Its non-IFRS operating profit grew 17% year-over-year to €1.74 billion ($2.06 billion). Its non-IFRS profit after tax came in at €1.72 billion ($2.03 billion), which represents a 70% year-over-year increase. The company’s non-IFRS EPS was €1.40 ($1.65), up 63% year-over-year.
The company’s EPS is expected to increase 5.8% year-over-year to $1.45 for the quarter ended June 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 3.9% year-over-year to $33.78 billion in 2022. The stock has rallied 18.1% over the past six months to close yesterday’s trading session at $147.69.
SAP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Value, Stability, Sentiment, and Quality. We have also graded SAP for Growth and Momentum. Click here to access all of SAP’s ratings. SAP is ranked #3 of 132 stocks in the Software – Application industry.
Santa Barbara, Calif.-based QADA, together with its subsidiaries, provides cloud-based enterprise software solutions. It offers effective enterprise management software products that include financials, internationalization, cloud EDI, EDI eCommerce, and e-invoicing solutions. In addition, the company offers customer support and product update services, as well as professional services, and serves automotive, life sciences, and consumer products.
On June 2,QADA signed a partnership agreement with T.C.C. Technology Co., Ltd., making it a channel partner in…
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