Microsoft Corporation (NASDAQ: MSFT) is one of 118 publicly-traded companies in the “Software” industry, but how does it contrast to its peers? We will compare Microsoft Corporation to related companies based on the strength of its profitability, earnings, analyst recommendations, valuation, risk, institutional ownership and dividends.

Valuation & Earnings

This table compares Microsoft Corporation and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Microsoft Corporation $89.95 billion $30.43 billion 28.14
Microsoft Corporation Competitors $1.51 billion $446.17 million 42.44

Microsoft Corporation has higher revenue and earnings than its peers. Microsoft Corporation is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Risk and Volatility

Microsoft Corporation has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Microsoft Corporation’s peers have a beta of 0.98, indicating that their average stock price is 2% less volatile than the S&P 500.

Institutional and Insider Ownership

73.4% of Microsoft Corporation shares are owned by institutional investors. Comparatively, 58.4% of shares of all “Software” companies are owned by institutional investors. 3.0% of Microsoft Corporation shares are owned by insiders. Comparatively, 20.0% of shares of all “Software” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Microsoft Corporation and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Microsoft Corporation 23.57% 36.81% 11.46%
Microsoft Corporation Competitors -42.00% -25.21% -9.86%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Microsoft Corporation and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Microsoft Corporation 2 7 27 0 2.69
Microsoft Corporation Competitors 259 1984 4245 84 2.63

Microsoft Corporation currently has a consensus target price of $77.39, indicating a potential upside of 1.86%. As a group, “Software” companies have a potential upside of 7.26%. Given Microsoft Corporation’s peers higher possible upside, analysts clearly believe Microsoft Corporation has less favorable growth aspects than its peers.

Dividends

Microsoft Corporation pays an annual dividend of $1.56 per share and has a dividend yield of 2.1%. Microsoft Corporation pays out 57.8% of its earnings in the form of a dividend. As a group, “Software” companies pay a dividend yield of 1.1% and pay out 62.6% of their earnings in the form of a dividend. Microsoft Corporation has increased its dividend for 13 consecutive years. Microsoft Corporation is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Summary

Microsoft Corporation beats its peers on 11 of the 15 factors compared.

Microsoft Corporation Company Profile

Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company’s segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing. The Company’s products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.

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