SAP (NYSE:SAP) and Oracle (NYSE:ORCL) are both large-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitability, dividends and earnings.
Dividends
SAP pays an annual dividend of $1.25 per share and has a dividend yield of 1.0%. Oracle pays an annual dividend of $0.96 per share and has a dividend yield of 1.6%. SAP pays out 31.1% of its earnings in the form of a dividend. Oracle pays out 27.7% 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. Oracle has increased its dividend for 1 consecutive years. Oracle is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for SAP and Oracle, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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SAP | 0 | 12 | 12 | 0 | 2.50 |
Oracle | 0 | 15 | 11 | 0 | 2.42 |
SAP presently has a consensus price target of $137.00, suggesting a potential upside of 9.60%. Oracle has a consensus price target of $64.8977, suggesting a potential upside of 5.05%. Given SAP's stronger consensus rating and higher possible upside, research analysts plainly believe SAP is more favorable than Oracle.
Profitability
This table compares SAP and Oracle's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
SAP | 17.59% | 17.39% | 8.59% |
Oracle | 26.34% | 101.26% | 10.77% |
Earnings & Valuation
This table compares SAP and Oracle's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
SAP | $30.86 billion | N/A | $3.72 billion | $4.02 | 31.09 |
Oracle | $39.07 billion | 4.66 | $10.14 billion | $3.46 | 17.86 |
Oracle has higher revenue and earnings than SAP. Oracle is trading at a lower price-to-earnings ratio than SAP, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
SAP has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Oracle has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.
Insider and Institutional Ownership
47.5% of Oracle shares are held by institutional investors. 7.4% of SAP shares are held by company insiders. Comparatively, 39.1% of Oracle shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Summary
Oracle beats SAP on 10 of the 16 factors compared between the two stocks.