Microsoft (NASDAQ:MSFT) versus Oracle (NYSE:ORCL) Financial Analysis

Microsoft (NASDAQ:MSFT) and Oracle (NYSE:ORCL) are both large-cap computer and technology companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, dividends, valuation and profitability.

Volatility and Risk

Microsoft has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, Oracle has a beta of 1.43, indicating that its stock price is 43% more volatile than the S&P 500.

Institutional and Insider Ownership

71.1% of Microsoft shares are owned by institutional investors. Comparatively, 42.4% of Oracle shares are owned by institutional investors. 0.0% of Microsoft shares are owned by company insiders. Comparatively, 42.2% of Oracle shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Microsoft pays an annual dividend of $3.32 per share and has a dividend yield of 0.7%. Oracle pays an annual dividend of $2.00 per share and has a dividend yield of 0.8%. Microsoft pays out 24.3% of its earnings in the form of a dividend. Oracle pays out 46.1% 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 raised its dividend for 23 consecutive years and Oracle has raised its dividend for 1 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Microsoft and Oracle, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microsoft	0	2	29	1	2.97
Oracle	0	8	23	3	2.85

Microsoft currently has a consensus price target of $612.54, suggesting a potential upside of 20.88%. Oracle has a consensus price target of $227.04, suggesting a potential downside of 3.74%. Given Microsoft’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Microsoft is more favorable than Oracle.

Profitability

This table compares Microsoft and Oracle’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Microsoft	36.15%	32.44%	18.20%
Oracle	21.68%	87.34%	8.94%

Earnings and Valuation

This table compares Microsoft and Oracle”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microsoft	$281.72 billion	13.37	$101.83 billion	$13.64	37.15
Oracle	$57.40 billion	11.54	$12.44 billion	$4.34	54.35

Microsoft has higher revenue and earnings than Oracle. Microsoft is trading at a lower price-to-earnings ratio than Oracle, indicating that it is currently the more affordable of the two stocks.

Summary

Microsoft beats Oracle on 12 of the 18 factors compared between the two stocks.

About Microsoft

Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services. This segment also provides LinkedIn; and dynamics business solutions, including Dynamics 365, a set of intelligent, cloud-based applications across ERP, CRM, power apps, and power automate; and on-premises ERP and CRM applications. The Intelligent Cloud segment offers server products and cloud services, such as azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services. The More Personal Computing segment offers Windows, including windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, windows cloud services, and other Windows commercial offerings; patent licensing; and windows Internet of Things; and devices, such as surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, and first- and third-party content; Xbox game pass and other subscriptions, cloud gaming, advertising, third-party disc royalties, and other cloud services; and search and news advertising, which includes Bing, Microsoft News and Edge, and third-party affiliates. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online, and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.

About Oracle

Oracle Corporation offers products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offering include various cloud software applications, including Oracle Fusion cloud enterprise resource planning (ERP), Oracle Fusion cloud enterprise performance management, Oracle Fusion cloud supply chain and manufacturing management, Oracle Fusion cloud human capital management, Oracle Cerner healthcare, Oracle Advertising, and NetSuite applications suite, as well as Oracle Fusion Sales, Service, and Marketing. The company also offers cloud-based industry solutions for various industries; Oracle application licenses; and Oracle license support services. In addition, it provides cloud and license business' infrastructure technologies, such as the Oracle Database and MySQL Database; Java, a software development language; and middleware, including development tools and others. The company's cloud and license business' infrastructure technologies also comprise cloud-based compute, storage, and networking capabilities; and Oracle autonomous database, MySQL HeatWave, Internet-of-Things, digital assistant, and blockchain. Further, it provides hardware products and other hardware-related software offerings, including Oracle engineered systems, enterprise servers, storage solutions, industry-specific hardware, virtualization software, operating systems, management software, and related hardware services; and consulting and customer services. The company markets and sells its cloud, license, hardware, support, and services offerings directly to businesses in various industries, government agencies, and educational institutions, as well as through indirect channels. The company has a collaboration with Amdocs Limited to empower customers on their journey towards cloud and digital adoption. Oracle Corporation was founded in 1977 and is headquartered in Austin, Texas.