Microsoft vs Tesla

Both Microsoft and Tesla are technology giants with strong positions in their respective industries. Microsoft is known for its dominant position in the software market and has consistently delivered strong financial results over the years. On the other hand, Tesla is a disruptor in the automotive industry, known for its innovative electric vehicles and ambitious goals for sustainability. Both stocks have seen significant growth in recent years, but their market characteristics and growth potential differ significantly.

Microsoft or Tesla?

When comparing Microsoft and Tesla, 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 Tesla.

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 0.72%, while Tesla has a dividend yield of -%. 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 24.70%. On the other hand, Tesla reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

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 35.31 and Tesla's P/E ratio at 56.55. 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 11.59 while Tesla's P/B ratio is 10.54.

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 Tesla's is 2.63%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Microsoft's ROE at 35.95% and Tesla's ROE at 20.07%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $415.26 for Microsoft and $217.12 for Tesla. Over the past year, Microsoft's prices ranged from $324.39 to $468.35, with a yearly change of 44.38%. Tesla's prices fluctuated between $138.80 and $271.00, with a yearly change of 95.24%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.