SAP (NYSE:SAP) & Salesforce (NYSE:CRM) Head to Head Comparison

Salesforce (NYSE:CRM) and SAP (NYSE:SAP) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

80.4% of Salesforce shares are held by institutional investors. 3.5% of Salesforce shares are held by insiders. Comparatively, 7.3% of SAP shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Salesforce pays an annual dividend of $1.76 per share and has a dividend yield of 1.1%. SAP pays an annual dividend of $2.14 per share and has a dividend yield of 1.3%. Salesforce pays out 20.4% of its earnings in the form of a dividend. SAP pays out 26.9% 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. Salesforce has increased its dividend for 1 consecutive years.

Volatility and Risk

Salesforce has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, SAP has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Earnings and Valuation

This table compares Salesforce and SAP”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salesforce	$41.52 billion	3.23	$7.46 billion	$8.64	18.94
SAP	$41.63 billion	4.72	$8.10 billion	$7.96	20.10

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Salesforce	18.73%	18.72%	9.76%
SAP	20.88%	17.16%	10.81%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Salesforce and SAP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salesforce	4	16	24	2	2.52
SAP	0	8	12	1	2.67

Salesforce currently has a consensus price target of $249.51, indicating a potential upside of 52.46%. SAP has a consensus price target of $267.00, indicating a potential upside of 66.91%. Given SAP’s stronger consensus rating and higher possible upside, analysts plainly believe SAP is more favorable than Salesforce.

Summary

SAP beats Salesforce on 10 of the 18 factors compared between the two stocks.

About Salesforce

Salesforce, Inc. provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. The company's service includes sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and artificial intelligence, and deliver quotes, contracts, and invoices; and service that enables companies to deliver trusted and highly personalized customer support at scale. In addition, its platform offering comprise a flexible platform that enables companies of various sizes, locations, and industries to build business workflow and apps with customer; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, an intelligent productivity platform. The company's marketing services enables companies to plan, personalize, automate, and optimize customer marketing journey, connecting interaction, and connected products; and commerce services, which empowers shopping experience across various customer touchpoint, such as mobile, web, social, and stores and provides click-to-code tools that offers customers to build and deploy solutions. Further, its analytics offering includes Tableau, an end-to-end analytics solution for range of enterprise use cases and intelligent analytics with AI models, spot trends, predict outcomes, creates summaries, timely recommendations, and take action from any device; and integration service including MuleSoft, which provides building blocks to deliver end-to-end and connected experiences. Additionally, the company provides data cloud, a hyperscale data engine native to Salesforce; vertical services to meet the needs of customers in industries, such as financial services, healthcare and life sciences, manufacturing and automotive and government; and offers salesforce starter for small and medium-sized businesses. Salesforce, Inc. was incorporated in 1999 and is headquartered in San Francisco, California.

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.