NEW YORK (TheStreet) -- Shares of SAP SE (SAP) closed up 0.59% to $66.07 on Tuesday after JMP Securities maintained its "market perform" rating for the company.
The firm said it reiterated its rating for the German multinational software company because of better than expected revenue.
"SAP saw strong growth in its cloud business (up 41% y/y) and solid growth in its support revenue (up 8% y/y) as it shifts business more and more to the cloud," said "JMP analysts Patrick Walravens and Peter Lowry. "We believe this is absolutely the right strategy, even if it causes near-term compression in operating profits."
Must Read: Warren Buffett's 25 Favorite Stocks STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. Separately, TheStreet Ratings team rates SAP SE as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation: "We rate SAP SE (SAP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows: Despite its growing revenue, the company underperformed as compared with the industry average of 11.5%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. SAP's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.95 is somewhat weak and could be cause for future problems. The gross profit margin for SAP SE is currently very high, coming in at 74.81%. Regardless of SAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 13.41% trails the industry average. The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, SAP SE's return on equity exceeds that of both the industry average and the S&P 500. You can view the full analysis from the report here: SAP Ratings Report STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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