SAP vs IBM Which Is More Profitable?

SAP SE and International Business Machines Corporation (IBM) are two prominent companies in the tech industry, both offering a range of products and services to businesses worldwide. When comparing their stocks, investors need to consider factors such as revenue growth, profitability, market share, and future growth potential. SAP has shown consistent revenue growth and profitability, while IBM has faced challenges in recent years. Understanding the strengths and weaknesses of each company can help investors make informed decisions about their investment portfolios.

SAP or IBM?

When comparing SAP 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 SAP 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. SAP has a dividend yield of 0.86%, while IBM has a dividend yield of 2.55%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. SAP reports a 5-year dividend growth of 8.83% year and a payout ratio of 82.11%. On the other hand, IBM reports a 5-year dividend growth of 0.74% year and a payout ratio of 102.04%.

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 SAP P/E ratio at 95.27 and IBM's P/E ratio at 40.69. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. SAP P/B ratio is 6.55 while IBM's P/B ratio is 8.98.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, SAP has seen a 5-year revenue growth of 0.27%, while IBM's is 0.03%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with SAP's ROE at 7.29% and IBM's ROE at 24.33%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $273.58 for SAP and $245.18 for IBM. Over the past year, SAP's prices ranged from $175.08 to $293.70, with a yearly change of 67.75%. IBM's prices fluctuated between $162.62 and $265.72, with a yearly change of 63.40%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.