Critical Survey: SAP (NYSE:SAP) versus Trend Micro (OTCMKTS:TMICY)

SAP (NYSE:SAP) and Trend Micro (OTCMKTS:TMICY) are both technology companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Profitability

This table compares SAP and Trend Micro’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SAP	20.87%	17.49%	10.77%
Trend Micro	12.30%	28.58%	8.73%

Analyst Recommendations

This is a summary of current recommendations and price targets for SAP and Trend Micro, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SAP	0	7	12	1	2.70
Trend Micro	1	0	0	1	2.50

SAP presently has a consensus price target of $258.83, indicating a potential upside of 10.87%. Given SAP’s stronger consensus rating and higher probable upside, analysts clearly believe SAP is more favorable than Trend Micro.

Valuation & Earnings

This table compares SAP and Trend Micro”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SAP	$39.39 billion	7.28	$8.10 billion	$8.19	28.51
Trend Micro	$1.85 billion	3.18	$231.30 million	$1.76	25.53

SAP has higher revenue and earnings than Trend Micro. Trend Micro is trading at a lower price-to-earnings ratio than SAP, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

SAP has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500. Comparatively, Trend Micro has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Dividends

SAP pays an annual dividend of $2.13 per share and has a dividend yield of 0.9%. Trend Micro pays an annual dividend of $0.89 per share and has a dividend yield of 2.0%. SAP pays out 26.0% of its earnings in the form of a dividend. Trend Micro pays out 50.6% 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.

Institutional and Insider Ownership

0.1% of Trend Micro shares are held by institutional investors. 7.3% of SAP shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

SAP beats Trend Micro on 13 of the 16 factors compared between the two stocks.

About SAP

SAP SE, together with its subsidiaries, provides applications, technology, and services worldwide. It offers SAP S/4HANA that provides software capabilities for finance, risk and project management, procurement, manufacturing, supply chain and asset management, and research and development; SAP SuccessFactors solutions for human resources, including HR and payroll, talent and employee experience management, and people and workforce analytics; and spend management solutions that covers direct and indirect spend, travel and expense, and external workforce management. The company also provides SAP customer experience solutions; SAP Business Technology platform that enables customers and partners to build, integrate, and automate applications; and SAP Business Network, a business-to-business collaboration platform that helps digitalize key business processes across the supply chain and enables communication between trading partners. In addition, it offers SAP Signavio to help customers to discover, analyze, and understand their business process operations; SAP's industry cloud solutions that provides modular solutions addressing industry-specific functions; Taulia solutions for working capital management to help enable customers mitigate the effects of inflation by providing visibility into working capital and access to liquidity; and sustainability solutions and services. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.

About Trend Micro

Trend Micro Incorporated develops and sells security-related software for computers and related services in Japan and internationally. The company offers platforms, such as vision one platform, attack surface management, extended detection and response (XDR), cloud security, endpoint security, network security, email security, OT/ICS security, and threat intelligence. It also provides services packages, managed XDR, incident response, and support services. Additionally, the company serves 5G networks, healthcare, manufacturing, oil and gas, electric utility, and automotive industries. The company was incorporated in 1965 and is headquartered in Tokyo, Japan.