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The dialog in international markets usually circles again to US tech. The Magnificent Seven nonetheless dominate headlines and investor portfolios, with names like Apple, Microsoft and Nvidia setting the tempo. However whereas American shares seize the limelight, a couple of homegrown FTSE shares are quietly proving that British know-how firms can maintain their very own.
Two that stand out to me are Sage Group (LSE: SGE) and Computacenter (LSE: CCC). They may lack the trillion-dollar valuations of their Silicon Valley counterparts, however each have carved out worthwhile niches and proceed to ship for shareholders.
Sage Group: Britain’s software program stalwart
Sage has been round since 1981, lengthy earlier than cloud computing was even a time period. It specialises in accounting, payroll and fee software program, serving small and medium-sized enterprises (SMEs) all over the world.
The corporate’s shift from on-premises software program to subscription-based cloud companies has remodeled its monetary profile. Recurring income now makes up over 70% of gross sales, offering a steady base for progress that’s boosted the share worth 47% previously three years.
In its newest outcomes, it reported an 11% enhance in annual recurring income (ARR), with working revenue margins holding regular at round 21%.
In comparison with US rivals like Intuit (proprietor of QuickBooks), Sage trades at a much more modest valuation — a ahead price-to-earnings (P/E) ratio of 24 versus Intuit’s 35. That decrease a number of may supply higher worth for long-term buyers, particularly if subscription progress continues at its present tempo.
Computacenter: the infrastructure spine
If Sage is about software program, Computacenter is all about IT infrastructure. It gives know-how sourcing, integration and managed companies to company and authorities purchasers.
In an business the place scale and reliability matter, it has constructed an enviable repute. Income grew 3% in 2024 and earnings virtually doubled within the second half, with the enterprise benefitting from long-term contracts that present visibility on future earnings.
Sure, working margins are slimmer than US {hardware} and repair giants like Dell or Hewlett-Packard. However the firm’s concentrate on effectivity and buyer retention leads to a return on fairness (ROE) of virtually 20%.
Buying and selling at a ahead P/E ratio of simply 14 and providing a 3% dividend yield, Computacenter appears to be like attractively priced in comparison with many US friends — significantly given its fee monitor document and 40% dividend progress since 2020.
How they examine to US tech
The most important distinction between these British tech shares and their US counterparts lies in scale and valuation. American tech companies usually command hefty premiums, reflecting larger progress expectations. That may work in a bull market nevertheless it additionally means greater worth fall danger if sentiment turns.
Sage and Computacenter supply a extra measured mixture of progress, earnings and stability. Their valuations are decrease, dividend yields larger, and income streams extra predictable. For buyers preferring much less volatility with out giving up publicity to the tech sector, these are two shares price contemplating.
Whereas they might by no means match the explosive share worth beneficial properties of a surging Nvidia or Tesla, Sage Group and Computacenter present that FTSE shares within the tech sector can ship regular returns and aggressive earnings.
In an index usually criticised for missing innovation, these two stand out as examples of how British firms can thrive on the worldwide stage — with no need a Silicon Valley postcode.
