Software AG - Germany 2nd largest SW company

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Software AG is offering a software platform for digital business application such as a company core processes in integration, process management, realtime analysis and IT Architecture! 

I found this company as it today was the "biggest looser" on the German Stock exchange MDAX, Germany's next biggest Index after the DAX, with a -2.32% decline!

The stock closed today at €35.44 - the 52-week high was at €44.50 and the 52-week low at €30.20. ✅

Let's look how the company stock price has developed the last years...

The 1-y, 3y, 5y and 10 year performance is +16%, -11%, +7%, -10% => up, down, up, down

What does the 10-year chart says us

A long upward trend from the big drop since mid 2014, a first steeper upward trend until 2018, and then up again and then down! It look likes that we are somewhere in the middle of the chart✅

The 1 year chart:

We see the upward trend since November 2020 and that we are hitting a roof (resistance level) at €37

The shareholder structure is as followed

The major shareholder with 33% is foundation of Software AG, which is prior CEO and founder Peter Schnell foundation who has the control over the company. You see as well some bigger funds owning stake in the company! ✅

Balance Sheet next, first the asset side

The first that my eyes felt on was the cash ("Kassenbestand") of 480m€ which has accumulated since 2016. Total Assets has stayed the same at €2billion - the biggest "asset" is an Inmaterials, i.e  Goodwill, but it has stayed the same the last 5 years - expected for a SW company.✅

Turn the page to the other side

First of the Debt-to-equity ratio, which is a healthy 35% - I don't find any abnormalities, the long-term debt ("Langfristige Finanzverbindlichkeiten") is easily paid of with half of the cash on the asset side => very strong balance sheet. The Equity ("Summe Eigenkapital") has grown 200m€ the last 5 years which comes mainly from the retained earnings and the liabilities is kept the same!✅

Income Statement

It has Net Income over €100m Net Income the last 5 years, except 2020, understandable! Similar development for the EBIT ("Operatives Ergebnis") which has been stable at €200m, except for 2020. The revenue has not grown that much the last 5 years either, the big question is why! It looks like a stable and safe company, but why can they not grow more the last years ✅

What more did I detect from the looking through the pages:

• ROE = 7.3% => I assume they are just earning their Cost of Equity
• Dividend yield = 2.09% = they are paying out money as they cannot find higher return on investments
• Market Cap = €2.7b
• EBIT Margin = 15.63%
• Shares outstanding = 74Mio

Summary: I think if its drops to €30, it could be considered or if they would find growth to invest their money in, that it might be moving