Q: In a recent comment on SAP the Debt was characterized as “pretty high” and a “concern”. Could you please quantify? The Net Debt / EBITDA looks to be around 2.0x which could be viewed as quite normal or even “good”. Perhaps the fact that the company has failed to grow despite carrying some Debt is the issue?
5i Research Answer:
We include lease obligations as debt, and with that metric debt/cash flow is 3X. But cash flow is quite stable and we should have noted that debt has gone down about $800M in the past five years. We would still consider it on the high-ish side these days but concern is probably too strong of a word. But yes on the growth side: EPS this year is still going to be less than it was in 2017.