Sage Group (SGE) shares soar 5%: Is it the right time to buy?

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Sage Group (SGE) shares soar 5%: Is it the right time to buy?

 Sage Group (SGE) shares soar 5%: Is it the right time to buy?
Image source: jijomathaidesigners, Shutterstock.com

Highlights 

  • Sage Group’s board declared a dividend of 17.68 pence per share to shareholders during the period compared to 17.25 pence per share in FY 2020.
  • The company plans to snap up deals and acquisitions with the aim to strategically expand.
  • Revenue from the company’s business cloud segment rose to £997 million in FY 2021 compared to £835 million in FY 2020, representing an increase of 19%.

The shares of Sage Group surged around 5% to trade at GBX 763.40 on Wednesday, 17 November 2021. The FTSE 100 listed UK-based international enterprise software firm shares surged after announcing a dividend of 17.68 pence per share to shareholders for the year ended 30 September 2021. The market cap of the company stands at £7,474.75 million. Shares of the Sage Group have given a year-to-date (YTD) return of 31.44% to shareholders.

The company is mainly engaged in offering technology solutions to small- and medium-sized enterprises (SMEs). The company handles 10 billion invoices annually and payroll for about one-fourth of the country’s total salaried employees.

Financial performance

Sage Group reported a 3% year-on-year decline in revenues to £1,846 million for the year ended 30 September 2021, compared to £1,903 million in FY 2020, on account of the disposal of Sage Pay and Sage's Brazil businesses in FY20. Its operating profit dipped by 8% year-on-year from £404 million in 2020 to £373 million in 2021. The company is forecasting revenue growth of 8% to 9% for next year.

The company’s board declared a dividend of 17.68 pence per share to shareholders during the period compared to 17.25 pence per share in FY 2020.

Financial performance by business segment

Sage Group’s primary focus is on the expansion of the Sage Business Cloud segment through the acquisition of new clients as well as migrating existing customers to the company’s cloud-connected and cloud-native solutions.

The company’s customers within Business Cloud can seamlessly connect to its digital network of cloud services. Revenue from the company’s business cloud segment rose to £997 million in FY 2021 compared to £835 million in FY 2020, representing an increase of 19%. The company’s ARR grew by 8% to £1,680 million during the period compared to £1,560 million in FY 2020.

Targeting deals for expansion

Sage Group’s CEO Steve Hare said that post significant reshaping and investments in the Group during the period of the last three years, the company plans to snap up deals and acquisitions with the aim to strategically expand.

Further, the company expects future growth to be supported by the growing adoption of digital transformation solutions by SMEs at a faster pace than ever before as businesses recover from the pandemic.

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