2 Warehouse Management Software Stocks to Keep Your Portfolio in Order
Ongoing digitization in almost every industry and the rapid growth of the e-commerce industry have been key drivers of the warehouse management systems market. Furthermore, the quickening transition to cloud-based...
Ongoing digitization in almost every industry and the rapid growth of the e-commerce industry have been key drivers of the warehouse management systems market. Furthermore, the quickening transition to cloud-based management systems in the warehouse industry is expected to fuel the demand for advanced and efficient software products and solutions in the foreseeable future. Therefore, we think warehouse management software stocks SAP SE (SAP) and Manhattan Associates (MANH) could be ideal bets now. Read on.
The evolution of industrial automation and rapid expansion of the e-commerce business have prompted most organizations to prioritize the deployment of warehouse automation systems (WMS) to attain high operational efficiency and functional capabilities. Consequently, leading warehouse management system providers are working on providing industry-specific customization in WMS that offers an end-to-end solution, allowing organizations to coordinate their operations and inventory across their networks.
Factors such as the rising demand for effective order management, increased outsourcing of logistics and transportation operations, and the globalization of supply chain networks have spurred the use of WMS. In addition, advancements in cloud-based technologies are expected to boost WMS software adoption. The global warehouse system management market is projected to reach $6.1 billion by 2026, registering a 16.7% CAGR.
Given this backdrop, we believe two fundamentally sound warehouse management stocks, SAP SE (SAP) and Manhattan Associates Inc. (MANH), could be a great addition to one’s portfolio. Both stocks possess solid growth attributes and might witness significant upside in the coming months.
SAP SE (SAP)
Headquartered in Germany, SAP is a global corporate application software company. Applications, Technology & Support; Concur; Qualtrics; and Services are the company's four operational segments. Its machine learning, Internet of Things (IoT), and advanced analytics solutions assist customers in transforming their enterprises into intelligent, sustainable corporations.
Last month, SAP announced the availability of SAP Responsible Design and Production, a solution for designing products sustainably and shifting to a circular economy. This is the most recent addition to a growing range of sustainability-focused software solutions delivered by the company that assist organizations in improving their measurement and data management skills.
SAP's total revenue increased 4.7% year-over-year to €6.85 billion ($7.73 billion) in the third quarter ended September 30, 2021. Its operating income was €1.25 billion ($1.41 billion). The company reported net income of €1.42 billion ($1.60 billion), while its EPS amounted to €1.19 ($1.34) over this period.
SAP's EPS is expected to grow 8.3% year-over-year to $6.92 in its fiscal year 2021. Analysts expect SAP's revenue to increase 4.7% year-over-year to $32.47 billion next year. The stock has gained 7.1% in price over the past year and 10.7% over the past nine months.
SAP's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SAP is also rated B grade for Value, Stability, and Sentiment. Within the Software – Application industry, it is ranked #12 of 169 stocks. To see additional POWR Ratings for Growth, Quality, and Momentum for SAP, click here.
Click here to check out our Software Industry Report
Manhattan Associates Inc. (MANH)
MANH develops, sells, implements, supports, and maintains software solutions for retailers, wholesalers, manufacturers, logistics providers, and other businesses to manage supply chains, inventories, and omnichannel operations. Furthermore, the Atlanta, Ga., company resells computer hardware, radio frequency terminal networks, radio frequency identification chip readers, barcode printers and scanners, and other accessories.
This month. Asda, a renowned British grocer, chose MANH to assist in the evolution of its logistics network in the U.K. MANH will assist Asda in more effectively distributing its products, fulfilling online orders, and managing resources, allowing the retailer to respond to changes and, ultimately, providing better choice and service to its 18 million-plus weekly consumers.
For the third quarter, ended September 30, 2021, MANH's revenue increased 12.9% from the year-ago value to $169.19 million. Its operating income grew 24.4% year-over-year to $42.41 million. And the company's net income surged 46.8% from the prior-year quarter to $36.65 million, while its EPS increased 46.2% from its year-ago value to $0.57.
The company's EPS is expected to grow 21% year-over-year to $2.13 in the current year. In addition, its revenue is projected to increase 11.7% in the current year and 8.1% next year. MANH's stock has gained 41.4% in price over the past year and 40.7% year-to-date.
MANH's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. MANH also has an A grade for Quality and a B for Sentiment. The stock is ranked #25 in the Software – Application industry.
Beyond the POWR Ratings grades I have just highlighted, you can see the MANH ratings for Growth, Value, Stability, and Momentum.
SAP shares fell $0.59 (-0.43%) in premarket trading Wednesday. Year-to-date, SAP has gained 6.38%, versus a 25.19% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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