Microsoft (NASDAQ:MSFT – Get Free Report) and SAP (NYSE:SAP – Get Free Report) are both large-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, institutional ownership, risk, valuation, earnings, profitability and analyst recommendations.
Profitability
This table compares Microsoft and SAP’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Microsoft | 36.15% | 32.44% | 18.20% |
| SAP | 19.50% | 15.87% | 9.70% |
Analyst Recommendations
This is a summary of recent ratings and target prices for Microsoft and SAP, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Microsoft | 0 | 2 | 32 | 1 | 2.97 |
| SAP | 0 | 1 | 15 | 1 | 3.00 |
Dividends
Microsoft pays an annual dividend of $3.32 per share and has a dividend yield of 0.6%. SAP pays an annual dividend of $1.84 per share and has a dividend yield of 0.7%. Microsoft pays out 24.3% of its earnings in the form of a dividend. SAP pays out 30.5% 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 increased its dividend for 23 consecutive years.
Insider and Institutional Ownership
71.1% of Microsoft shares are held by institutional investors. 0.0% of Microsoft shares are held by insiders. Comparatively, 7.4% of SAP shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Valuation & Earnings
This table compares Microsoft and SAP”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Microsoft | $281.72 billion | 13.73 | $101.83 billion | $13.64 | 38.16 |
| SAP | $36.99 billion | 9.25 | $3.38 billion | $6.04 | 46.09 |
Microsoft has higher revenue and earnings than SAP. Microsoft 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
Microsoft has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, SAP has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500.
Summary
Microsoft beats SAP on 12 of the 17 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 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.
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