Microsoft (MSFT) and Solera (SLH) Critical Comparison
Microsoft (NASDAQ: MSFT) and Solera (NYSE:SLH) are both mid-cap technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.
Microsoft pays an annual dividend of $1.68 per share and has a dividend yield of 1.8%. Solera pays an annual dividend of $0.90 per share and has a dividend yield of 1.6%. Microsoft pays out 56.8% of its earnings in the form of a dividend. Solera pays out -45.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Microsoft has increased its dividend for 8 consecutive years and Solera has increased its dividend for 14 consecutive years.
Microsoft has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500. Comparatively, Solera has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.
Earnings and Valuation
This table compares Microsoft and Solera’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Microsoft||$89.95 billion||8.07||$21.20 billion||$2.96||31.78|
Microsoft has higher revenue and earnings than Solera. Solera is trading at a lower price-to-earnings ratio than Microsoft, indicating that it is currently the more affordable of the two stocks.
This table compares Microsoft and Solera’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional & Insider Ownership
73.2% of Microsoft shares are held by institutional investors. 1.5% of Microsoft shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a summary of current ratings and price targets for Microsoft and Solera, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Microsoft currently has a consensus price target of $90.45, indicating a potential downside of 3.84%. Given Microsoft’s higher probable upside, research analysts plainly believe Microsoft is more favorable than Solera.
Microsoft beats Solera on 12 of the 14 factors compared between the two stocks.
Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company’s segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing. The Company’s products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.
Solera Holdings, Inc. is a United States-based company, which is a provider of risk and asset management software and services to the automotive and property marketplace, including the global property and casualty (P&C) insurance industry. The Company is engaged in cognitive technologies for the automotive and home ownership ecosystems. The Company’s solutions and services bring together consumers, insurers, banks, governments, manufacturers, owners, wholesalers, retailers, and service and repair industries, into digitally unified ecosystems that enable the management, protection and security of assets throughout their lifecycles. The Company’s product platforms include Audatex, AutoPoint, CAP/HPI, Digidentity, Explore Data, Hollander, Identifix, Inpart and TitleTec, as well as the company’s application, Digital Garage. The Company processes over 240 million transactions annually for approximately 200,000 partners in approximately 80 countries.
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