MicroStrategy (NASDAQ:MSTR) and Cadence Design Systems (NASDAQ:CDNS) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.
Profitability
This table compares MicroStrategy and Cadence Design Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| MicroStrategy | 0.41% | 7.36% | 3.97% |
| Cadence Design Systems | 42.68% | 48.31% | 28.21% |
Risk & Volatility
MicroStrategy has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, Cadence Design Systems has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.
Valuation & Earnings
This table compares MicroStrategy and Cadence Design Systems' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| MicroStrategy | $486.33 million | 14.02 | $34.35 million | $1.22 | 582.79 |
| Cadence Design Systems | $2.34 billion | 17.36 | $988.98 million | $3.53 | 41.18 |
Cadence Design Systems has higher revenue and earnings than MicroStrategy. Cadence Design Systems is trading at a lower price-to-earnings ratio than MicroStrategy, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current recommendations and price targets for MicroStrategy and Cadence Design Systems, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| MicroStrategy | 4 | 1 | 3 | 0 | 1.88 |
| Cadence Design Systems | 1 | 2 | 9 | 0 | 2.67 |
MicroStrategy presently has a consensus target price of $276.00, suggesting a potential downside of 61.18%. Cadence Design Systems has a consensus target price of $140.9167, suggesting a potential downside of 3.05%. Given Cadence Design Systems' stronger consensus rating and higher probable upside, analysts clearly believe Cadence Design Systems is more favorable than MicroStrategy.
Institutional & Insider Ownership
69.8% of MicroStrategy shares are held by institutional investors. Comparatively, 83.9% of Cadence Design Systems shares are held by institutional investors. 26.9% of MicroStrategy shares are held by company insiders. Comparatively, 2.6% of Cadence Design Systems shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Summary
Cadence Design Systems beats MicroStrategy on 11 of the 14 factors compared between the two stocks.
