IBM vs SAP Which Is More Profitable?

IBM and SAP are two of the most well-known technology companies in the world, with a strong presence in the market. Investors often compare their stocks to determine which may be a better investment opportunity. IBM has a long history of success, while SAP is known for its innovative software solutions. Both companies have seen fluctuations in their stock prices in recent years, making it important for investors to carefully analyze their financial performance and potential for growth before making any decisions.

IBM or SAP?

When comparing IBM 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 IBM 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. IBM has a dividend yield of 2.8%, while SAP has a dividend yield of 0.96%. 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, 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 IBM P/E ratio at 34.25 and SAP's P/E ratio at 98.89. 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 SAP's P/B ratio is 6.80.

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 SAP's is -0.21%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IBM's ROE at 27.14% and SAP's ROE at 6.71%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $234.22 for IBM and $253.72 for SAP. Over the past year, IBM's prices ranged from $157.89 to $238.38, with a yearly change of 50.98%. 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.