Microsoft vs IBM Which Is More Profitable?

Sure! Microsoft and IBM are two of the biggest technology companies in the world, both known for their innovative products and services. When it comes to stock performance, Microsoft has been on a steady upward trajectory in recent years, fueled by the success of its cloud computing and software businesses. On the other hand, IBM has faced challenges in adapting to the rapidly changing tech landscape. Investors continue to closely monitor the performance of both companies to determine the best investment opportunities in the technology sector.

Microsoft or IBM?

When comparing Microsoft and IBM, 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 IBM.

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 IBM has a dividend yield of 2.9%. 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, IBM reports a 5-year dividend growth of 1.32% year and a payout ratio of 95.65%.

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 36.87 and IBM's P/E ratio at 33.11. 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 11.60 while IBM's P/B ratio is 8.66.

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 IBM's is -0.22%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Microsoft's ROE at 34.56% and IBM's ROE at 27.14%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $444.05 for Microsoft and $230.12 for IBM. Over the past year, Microsoft's prices ranged from $364.13 to $468.35, with a yearly change of 28.62%. IBM's prices fluctuated between $157.89 and $239.35, with a yearly change of 51.59%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.