Microsoft vs Alcoa Which Outperforms?

Microsoft and Alcoa are two well-known companies that operate in completely different industries. Microsoft is a technology powerhouse, dominating the software and hardware markets with products like Windows, Office, and Xbox. On the other hand, Alcoa is a leading manufacturer of aluminum products used in various sectors such as aerospace, automotive, and construction. Investors often compare the two stocks to diversify their portfolios and capitalize on different market trends. Let's take a closer look at how Microsoft and Alcoa stocks have performed in recent years.

Microsoft or Alcoa?

When comparing Microsoft and Alcoa, 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 Microsoft and Alcoa.

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. Microsoft has a dividend yield of 0.69%, while Alcoa has a dividend yield of 0.95%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Microsoft reports a 5-year dividend growth of 10.16% year and a payout ratio of 24.63%. On the other hand, Alcoa reports a 5-year dividend growth of 0.00% year and a payout ratio of -27.74%.

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 Microsoft P/E ratio at 36.63 and Alcoa's P/E ratio at -33.36. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Microsoft P/B ratio is 11.52 while Alcoa's P/B ratio is 1.86.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Microsoft has seen a 5-year revenue growth of 0.99%, while Alcoa's is -0.18%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Microsoft's ROE at 34.56% and Alcoa's ROE at -6.71%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $440.50 for Microsoft and $41.88 for Alcoa. Over the past year, Microsoft's prices ranged from $364.13 to $468.35, with a yearly change of 28.62%. Alcoa's prices fluctuated between $23.80 and $47.77, with a yearly change of 100.71%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.