Salesforce vs Shopify Which Is a Smarter Choice?

Salesforce and Shopify are two prominent players in the e-commerce and cloud computing industries. Salesforce, known for its customer relationship management software, has seen steady growth in its stock price over the past few years. Whereas, Shopify, a leading e-commerce platform, has experienced rapid growth fueled by the increasing trend of online shopping. Both companies have shown resilience during the pandemic and continue to attract investor interest with their strong financial performances and market positions.

Salesforce or Shopify?

When comparing Salesforce and Shopify, 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 Salesforce and Shopify.

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. Salesforce has a dividend yield of 0.33%, while Shopify has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Salesforce reports a 5-year dividend growth of 0.00% year and a payout ratio of 14.69%. On the other hand, Shopify 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 Salesforce P/E ratio at 44.37 and Shopify's P/E ratio at 110.46. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Salesforce P/B ratio is 5.96 while Shopify's P/B ratio is 15.10.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Salesforce has seen a 5-year revenue growth of 1.16%, while Shopify's is 4.42%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Salesforce's ROE at 13.35% and Shopify's ROE at 14.85%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $361.09 for Salesforce and $116.40 for Shopify. Over the past year, Salesforce's prices ranged from $212.00 to $369.00, with a yearly change of 74.06%. Shopify's prices fluctuated between $48.56 and $120.72, with a yearly change of 148.60%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.