22. April 2021 | 10:40 CET
SAP, wallstreet:online, Commerzbank - Money makes the world go round, get on board!
Summit stormers and expectation management. While April has shown us its full range in weather in recent weeks, the stock market knows only one direction. New all-time highs in the stock markets reflect progress in fighting the pandemic as vaccination numbers rise. The bar for the just-started reporting season is very high this year. According to surveys, earnings in the S&P 500 are expected to increase by a whopping 24%. At the beginning of the year, expectations were much lower. Traditionally, the reporting season is opened by US banks in mid-April. Their figures exceeded market expectations by a wide margin, as the institutions were able to release provisions for loans. However, the fact that a share can be punished very quickly despite good figures was recently seen with Netflix. The following three companies will present their figures in the next few weeks. Who has the greatest short-term potential?
time to read: 4 minutes by Carsten Mainitz
SAP SE - Strong performance
Since mid-May, the SAP Group has released several good pieces of information. The Walldorf-based software company presents its first-quarter figures today, and shareholders will gather for the annual general meeting on May 12. A lot has happened since the share price plummeted to around EUR 90 in the fourth quarter of last year. At that time, the share was punished because of a more moderate medium-term outlook. Now the mood is brightening considerably. The share is currently trading at around EUR 116 again.
In the middle of the month, a more optimistic company forecast for the cloud business surprised market participants. Based on the preliminary key data of Q1 and the increase of the guidance regarding the lower end of the target range for cloud and software revenues. As a result, several analysts commented positively. In our opinion, this makes it likely that price targets for the shares of Europe's largest software group will be raised in the near future. Also, in the middle of the month, SAP reported that it would spin off its financial services business. SAP is setting up a joint venture with the investment company Dediq for this purpose. The joint venture aims to "quickly establish itself as a force in the IT market." Dediq is investing a reasonable half billion euros, while SAP is contributing products, expertise and sales. The deal is expected to go through in Q3, subject to approval by the antitrust authorities. SAP will then hold 20% of the shares in the JV.
The day before yesterday, there was news of a German-German partnership in the fight against the pandemic. Deutsche Telekom and SAP will build the technical infrastructure for the planned EU Covid certificate for more accessible travel in Europe. The EU announced that an initial contract had been signed with SAP and Telekom subsidiary T-Systems. The so-called "green certificate" is scheduled to go live at the end of the second quarter. It will allow Covid-relevant information such as test results, vaccinations and survived infections to be recorded and recognized throughout the EU. The EU states and the European Parliament still have to agree on the "green certificate" details. We keep our fingers crossed for all of us!
WALLSTREET:ONLINE AG - Short breather
In the first quarter, the brilliant price rally increased the Company's shares to almost EUR 30 by mid-February - a new all-time high. The figures for 2020 published at the end of February confirmed the Group's strong growth. The majority of analysts raised their price targets to around EUR 30, while a relatively sharp correction caused the share price to fall below EUR 18. Currently, the share price stands at EUR 21, valuing the Berlin-based Company just under EUR 300 million.
As the leading independent financial portal operator in the German-speaking region, the Group has a strong market position in a high-margin business. However, the excellent share performance in recent months was based on the development and expansion of the transaction business via the 70% subsidiary wallstreet:online capital AG. The launch of Smartbroker took place via this at the end of 2019. Smartbroker is a so-called Neo Broker, enabling customers to trade for free or trade at very low conditions. Smartbroker differentiates itself by offering low or zero fees and a wide range of products. This combination is very well received by users, as measured by customer growth. The Group earns by receiving commissions from brokers or platforms for trades made. The reach of the financial portals also brings a USP into play that should significantly fuel the growth of Smartbroker in the future. Links to the portals already exist, and a trading app will be launched in the current year.
Growth and expansion often require stronger personnel structures. For this reason, the Management Board has recently been strengthened once again. Matthias Hach became the Group's new CEO on March 1. Hach brings years of experience in online brokerage with several established players. Since April 1, the Executive Board has now grown to 5 people. Roland Nicklaus, who has been a member of the Supervisory Board for 13 years, takes over the function of CFO. The expanded team will thus be able to continue the success story.
COMMERZBANK AG - Things are getting exciting
Things are getting exciting at Commerzbank. On May 12, the Frankfurt-based bank will report on its performance in the first quarter. A few days later, on May 18, the Company will be inviting shareholders to its virtual Annual General Meeting. Given the excellent figures published by the major US banks a few days ago, anticipation also arose among German bank stocks. While anticipation is the best joy, this state of mind should sometimes be better used for profit-taking on the stock market. The past has shown far too often that German industry representatives lag miles behind the big players from the USA in terms of dynamism and profitability. Margins and return on equity are only a fraction of what the big players from overseas achieve. Therefore, it is not surprising that Commerzbank's shares are trading at a quarter of their book value, while those of its US competitors are trading at many times their book value.
But the chart situation is also becoming increasingly exciting. Will the share succeed in sustainably surpassing the EUR 5.20 mark? Further suspense is in the air with the question of how the bank's restructuring is progressing and whether it will be possible to surprise positively at some point. After all, the book value is attractive, but profits are also needed. Whether that will be the case in 2022 or not until 2023 remains to be seen. Commerzbank announced that it would spend a total of around EUR 1.8 billion on restructuring as part of its 2024 strategy. It is questionable whether this budget will be sufficient.