Is the Sage share price expensive at 720p?

Sage (LON:SGE) is a large cap stock in the Software industry. The company provides solutions that help businesses of all shapes and sizes to manage accounting and finances payments, people and payroll.

Right now the Sage share price is on the expensive side from a factor perspective, based on its Value Rank of 26. Let's see why this is.

A closer look at Sage's Value Rank

We can see by using Sage’s StockReport that the group has a:

• Rolling price to book value of 5.67,
• Trailing twelve month price to earnings ratio of 23.5
• Trailing twelve month price to free cashflow of 17.9
• Rolling dividend yield of 2.36%
• Trailing twelve-month price to sales ratio of 4.12

This combination of financial traits suggests that Sage stock is toward the more expensive end of the market. Being expensive is not the end of the world, of course - but it does help to have favourable exposures to other factors to justify the share price premium.

What does this mean for potential investors?

Some of the best quality stocks in the market have defensible models that can deliver high levels of shareholder returns over the long term. But there are no guarantees and it's important to do your own research. Indeed, we've identified some areas of concern with Sage that you can find out about here.