IBM vs Oracle Which Offers More Value?

IBM and Oracle are two stalwarts in the tech industry, both known for their expertise in providing software and services to businesses around the world. Investors have long been drawn to these companies for their strong track records of innovation and high profitability. However, in recent years, their stocks have shown different trajectories, with IBM struggling to adapt to changing market dynamics while Oracle continues to thrive. This comparison of their stocks will explore the factors driving their performance and investors' perceptions of their future prospects.

IBM or Oracle?

When comparing IBM and Oracle, 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 IBM and Oracle.

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. IBM has a dividend yield of 2.8%, while Oracle has a dividend yield of 0.83%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IBM reports a 5-year dividend growth of 1.32% year and a payout ratio of 95.65%. On the other hand, Oracle reports a 5-year dividend growth of 14.87% year and a payout ratio of 40.11%.

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 IBM P/E ratio at 34.25 and Oracle's P/E ratio at 48.22. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IBM P/B ratio is 8.96 while Oracle's P/B ratio is 48.93.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IBM has seen a 5-year revenue growth of -0.22%, while Oracle's is 0.92%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IBM's ROE at 27.14% and Oracle's ROE at 148.73%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $234.22 for IBM and $186.43 for Oracle. Over the past year, IBM's prices ranged from $157.89 to $238.38, with a yearly change of 50.98%. Oracle's prices fluctuated between $99.26 and $196.04, with a yearly change of 97.50%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.