This week's Barron's cover story is on ten great European companies. Included are three French companies, a Dutch company, an Italian company, and five from Germany, including SAP. Here's what Barron's Vito J. Racanelli has to say about SAP:
There is plenty to like about this business-software maker, which has a dominant position in Germany and gets about half its sales outside Europe. SAP has a 24% market share globally, almost twice that of its nearest competitor, Oracle (ORCL), says Matthew McCormick, a money manager at Bahl & Gaynor, who adds that business-software "customers tend to be very stick." Management, which owns about 10% of SAP, is shareholder-friendly, he says, and the firm has a strong balance sheet. Strong enough, in fact, to enable its recent $5.8 billion all-cash tender offer for Sybase (SY), a US company specializing in enterprise and mobile software.
Martin Schulz, an international equity managing director at PNC Capital Advisors, is another SAP fan. He estimates that with Sybase added to its already large installed customer base and potential 2%-3% price increases, the German giant should be able to keep raising its operating margins, already in the high-20% range, and keep boosting its profit at a double-digit rate.
Other notable companies include Bayer, Siemens, and BMW.