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SAP Misses Where it Counts

By Seth Jayson - Updated Apr 7, 2017 at 12:13PM

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Just the facts, Fool.

SAP (NYSE: SAP) reported earnings on Oct. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), SAP beat expectations on revenues and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share dropped significantly.

Margins shrank across the board.

Revenue details
SAP booked revenue of $5.10 billion. The 25 analysts polled by S&P Capital IQ expected revenue of $4.98 billion on the same basis. GAAP reported sales were 11% higher than the prior-year quarter's $4.58 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.91. The 11 earnings estimates compiled by S&P Capital IQ anticipated $0.94 per share. GAAP EPS of $0.67 for Q3 were 52% lower than the prior-year quarter's $1.41 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 68.2%, 330 basis points worse than the prior-year quarter. Operating margin was 23.6%, 1,000 basis points worse than the prior-year quarter. Net margin was 15.6%, 2,110 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $6.56 billion. On the bottom line, the average EPS estimate is $1.51.

Next year's average estimate for revenue is $20.93 billion. The average EPS estimate is $3.95.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 338 members out of 385 rating the stock outperform, and 47 members rating it underperform. Among 104 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 90 give SAP a green thumbs-up, and 14 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on SAP is outperform, with an average price target of $64.18.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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