SAP vs Xero

SAP and Xero are two prominent companies in the world of cloud-based accounting software. While SAP is a multinational corporation with a diverse range of business solutions, Xero is a smaller company focused solely on providing accounting software for small and medium-sized businesses. Both companies have seen impressive growth in recent years, but their stocks have performed differently in the market. Understanding the key differences between SAP and Xero stocks can help investors make informed decisions about which company to invest in.

SAP or Xero?

When comparing SAP and Xero, 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 Xero.

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 1.04%, while Xero has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. SAP reports a 5-year dividend growth of 6.69% year and a payout ratio of 96.76%. On the other hand, Xero 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 SAP P/E ratio at 92.76 and Xero's P/E ratio at 141.06. 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 5.90 while Xero's P/B ratio is 17.68.

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 0.29%, while Xero's is 2.11%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with SAP's ROE at 6.21% and Xero's ROE at 13.04%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $227.82 for SAP and A$147.01 for Xero. Over the past year, SAP's prices ranged from $127.30 to $232.23, with a yearly change of 82.43%. Xero's prices fluctuated between A$96.58 and A$152.41, with a yearly change of 57.81%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.