27th January 2016
As Sage releases its first quarter trading numbers, Helal Miah, investment research analyst at The Share Centre, explains what they mean for investors…
Quarter 1 trading at accounting software firm Sage saw organic revenues up 6.6% and recurring revenues up 10.4%, supported by a rise in software subscriptions and growth in its European and African operations. The management is confident that Sage will meet its full year guidance, which targets at least 6% organic revenue growth and a 25% operating margin.
Investors should acknowledge that Sage is a fairly defensive company with a stable financial position, paying a reasonable dividend which has grown steadily over the last five years. A forward price to earnings ratio of 21.5x compares favourably with the average in the sector of 19.2x.
We continue to maintain our ‘hold’ recommendation for medium risk investors, but we would not discourage them from buying if the price dips.