Stock Spotlight: SAP
FILMED IN AUGUST 2026
SAP's software is deeply embedded in the operations of companies around the world. Many rely on SAP's enterprise software to manage everything from supply chains and maintenance to finance and forecasting. In this latest stock spotlight, C.T. Fitzpatrick from Vulcan explores why SAP's technology is considered mission-critical and how recent market volatility created an opportunity to invest in the business.
Transcript
SAP is a leading provider of ERP software that stands for Enterprise Resource Planning.
ERP software has been compared to the the circulatory system in a living human being. The body just cannot function without it and modern corporations cannot function without it either.
A quick example is British Airways who uses SAP's ERP system to manage all of its engineering and repair and maintenance operations globally.
Another example is Daimler Benz, the global auto manufacturer that makes Mercedes uses ERP to manage their sales forecast, combine those sales forecasts with their supply chain to make sure that the factories are able to produce the cars that are demanded and also manage cost.
It manages the HR function within the company.
It also allows all this data to feed through the finance department, so they can manage the company and produce audited financial statements.
The company literally cannot be publicly traded without SAP’s ERP software.
The addressable market for ERP software is between $80 and $100 billion currently. It's projected to grow to about $150 billion over the next ten years.
Basically, any company of decent size, let's just say $5 billion in revenue and up, whether it's a publicly traded company or privately traded company, probably uses ERP software to manage their operations.
SAP is one of the stable value companies that we follow, whether it's discounted or not. We call that our MVP (most valuable player) list.
We've owned it successfully in the past when it's been discounted. It's been overvalued for much of the last decade, in our opinion.
But about a year ago, its stock began to fall precipitously based on AI related fears.
Meanwhile, their earnings have been growing at a double digit rate.
As a result of those curves crossing, the stock got to our estimate of fair value, kept falling and kept falling, and the value kept growing.
We believe that we have bought it with a substantial margin of safety and are excited to own it going forward.
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