Microsoft (NASDAQ:MSFT – Get Free Report) and Constellation Software (OTCMKTS:CNSWF – Get Free Report) are both large-cap technology companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.
Institutional and Insider Ownership
71.1% of Microsoft shares are owned by institutional investors. 0.0% of Microsoft shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of recent ratings for Microsoft and Constellation Software, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Microsoft | 0 | 5 | 42 | 0 | 2.89 |
| Constellation Software | 0 | 1 | 6 | 1 | 3.00 |
Valuation and Earnings
This table compares Microsoft and Constellation Software”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Microsoft | $331.84 billion | 11.10 | $133.75 billion | $17.96 | 27.62 |
| Constellation Software | $11.62 billion | 3.64 | $512.00 million | $45.33 | 44.01 |
Microsoft has higher revenue and earnings than Constellation Software. Microsoft is trading at a lower price-to-earnings ratio than Constellation Software, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Microsoft has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Constellation Software has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.
Dividends
Microsoft pays an annual dividend of $3.64 per share and has a dividend yield of 0.7%. Constellation Software pays an annual dividend of $4.00 per share and has a dividend yield of 0.2%. Microsoft pays out 20.3% of its earnings in the form of a dividend. Constellation Software pays out 8.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Microsoft has raised its dividend for 23 consecutive years. Microsoft is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Microsoft and Constellation Software’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Microsoft | 40.31% | 31.98% | 18.70% |
| Constellation Software | 7.60% | 48.87% | 13.09% |
Summary
Microsoft beats Constellation Software on 12 of the 18 factors compared between the two stocks.
About Microsoft
Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services. This segment also provides LinkedIn; and dynamics business solutions, including Dynamics 365, a set of intelligent, cloud-based applications across ERP, CRM, power apps, and power automate; and on-premises ERP and CRM applications. The Intelligent Cloud segment offers server products and cloud services, such as azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services. The More Personal Computing segment offers Windows, including windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, windows cloud services, and other Windows commercial offerings; patent licensing; and windows Internet of Things; and devices, such as surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, and first- and third-party content; Xbox game pass and other subscriptions, cloud gaming, advertising, third-party disc royalties, and other cloud services; and search and news advertising, which includes Bing, Microsoft News and Edge, and third-party affiliates. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online, and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.
About Constellation Software
Constellation Software Inc., together with its subsidiaries, acquires, builds, and manages vertical market software businesses in Canada, the United States, Europe, and internationally. It provides mission critical software solutions for public and private sector markets. The company is also involved in the software licensing; and sale of third-party hardware. In addition, it offers professional, and maintenance and other recurring services. Constellation Software Inc. was incorporated in 1995 and is headquartered in Toronto, Canada.
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