Critical Analysis: CounterPath (CPAH) versus Microsoft (MSFT)

CounterPath (NASDAQ: CPAH) and Microsoft (NASDAQ:MSFT) are both software – nec companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Volatility and Risk

CounterPath has a beta of -0.8, suggesting that its stock price is 180% less volatile than the S&P 500. Comparatively, Microsoft has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for CounterPath and Microsoft, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CounterPath 0 0 0 0 N/A
Microsoft 2 8 27 0 2.68

Microsoft has a consensus price target of $84.78, indicating a potential downside of 2.68%. Given Microsoft’s higher probable upside, analysts plainly believe Microsoft is more favorable than CounterPath.

Valuation & Earnings

This table compares CounterPath and Microsoft’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CounterPath $10.69 million 2.02 -$2.45 million ($0.51) -7.69
Microsoft $89.95 billion 7.47 $21.20 billion $2.96 29.43

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

Dividends

Microsoft pays an annual dividend of $1.68 per share and has a dividend yield of 1.9%. CounterPath does not pay a dividend. Microsoft pays out 56.8% of its earnings in the form of a dividend. CounterPath has raised its dividend for 14 consecutive years.

Profitability

This table compares CounterPath and Microsoft’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CounterPath -22.08% -27.03% -17.95%
Microsoft 24.56% 35.23% 11.27%

Institutional & Insider Ownership

5.4% of CounterPath shares are owned by institutional investors. Comparatively, 73.2% of Microsoft shares are owned by institutional investors. 38.3% of CounterPath shares are owned by company insiders. Comparatively, 1.5% of Microsoft shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Microsoft beats CounterPath on 13 of the 16 factors compared between the two stocks.

CounterPath Company Profile

CounterPath Corporation designs, develops and sells software and services that enable enterprises and telecommunication service providers to deliver unified communications (UC) services, including voice, video, messaging and collaboration functionality, over their Internet Protocol (IP)-based networks. The Company’s solutions range from software products to cloud-based services. Its software products include applications for smartphones, tablets and desktop computers, a Software Development Kit (SDK) for software developers seeking to add voice, video and messaging capabilities to their existing applications, and server-based software solutions for configuring, managing and supporting softphones and for deploying messaging and collaboration services. These software products are also available to customers in the form of cloud-based hosted services. The Company is focused on selling its software products to enterprises, telecommunication service providers and channel partners.

Microsoft 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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