Alphabet vs SAP Which Should You Buy?

Alphabet Inc. and SAP SE are two of the biggest players in the technology industry, with Alphabet known for its dominant position in the search engine market through Google, and SAP recognized for its enterprise software solutions. Both companies have seen significant growth in their stocks over the years, but their paths diverge when it comes to their business models and target markets. Understanding the differences between Alphabet and SAP stocks can help investors make informed decisions about where to put their money in the tech sector.

Alphabet or SAP?

When comparing Alphabet and SAP, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Alphabet and SAP.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Alphabet has a dividend yield of 0.31%, while SAP has a dividend yield of 0.99%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Alphabet reports a 5-year dividend growth of 0.00% year and a payout ratio of 5.22%. On the other hand, SAP reports a 5-year dividend growth of 6.69% year and a payout ratio of 90.44%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Alphabet P/E ratio at 25.47 and SAP's P/E ratio at 97.66. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Alphabet P/B ratio is 7.65 while SAP's P/B ratio is 6.72.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Alphabet has seen a 5-year revenue growth of 1.47%, while SAP's is -0.21%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Alphabet's ROE at 31.66% and SAP's ROE at 6.71%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $186.26 for Alphabet and $246.28 for SAP. Over the past year, Alphabet's prices ranged from $131.06 to $196.89, with a yearly change of 50.23%. SAP's prices fluctuated between $148.38 and $256.13, with a yearly change of 72.62%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.