Critical Analysis: Microsoft (NASDAQ:MSFT) & SS&C Technologies (NASDAQ:SSNC)

SS&C Technologies (NASDAQ:SSNC) and Microsoft (NASDAQ:MSFT) are both large-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Profitability

This table compares SS&C Technologies and Microsoft’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SS&C Technologies	12.70%	19.60%	6.85%
Microsoft	39.04%	32.34%	18.49%

Insider and Institutional Ownership

96.9% of SS&C Technologies shares are owned by institutional investors. Comparatively, 71.1% of Microsoft shares are owned by institutional investors. 16.4% of SS&C Technologies shares are owned by company insiders. Comparatively, 0.0% of Microsoft shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

SS&C Technologies pays an annual dividend of $1.08 per share and has a dividend yield of 1.4%. Microsoft pays an annual dividend of $3.64 per share and has a dividend yield of 0.9%. SS&C Technologies pays out 34.2% of its earnings in the form of a dividend. Microsoft pays out 22.8% 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. SS&C Technologies has raised its dividend for 9 consecutive years and Microsoft has raised its dividend for 23 consecutive years.

Earnings and Valuation

This table compares SS&C Technologies and Microsoft”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SS&C Technologies	$6.27 billion	2.92	$796.90 million	$3.16	23.98
Microsoft	$281.72 billion	10.78	$101.83 billion	$15.99	25.58

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

Analyst Ratings

This is a summary of current ratings and price targets for SS&C Technologies and Microsoft, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SS&C Technologies	0	2	6	1	2.89
Microsoft	0	4	39	2	2.96

SS&C Technologies presently has a consensus target price of $101.00, suggesting a potential upside of 33.26%. Microsoft has a consensus target price of $591.95, suggesting a potential upside of 44.74%. Given Microsoft’s stronger consensus rating and higher possible upside, analysts plainly believe Microsoft is more favorable than SS&C Technologies.

Risk & Volatility

SS&C Technologies has a beta of 1.18, indicating that its share price is 18% more volatile than the S&P 500. Comparatively, Microsoft has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Summary

Microsoft beats SS&C Technologies on 14 of the 18 factors compared between the two stocks.

About SS&C Technologies

SS&C Technologies Holdings, Inc. engages in the development and provision of software solutions to the financial services and healthcare industries. It operates through the following geographical segments: United States, Europe, Middle East and Africa, Asia Pacific and Japan, Canada, and the Americas, excluding the United States and Canada. Its products include advent genesis, antares, asset allocators, AWD, axys, BANC mall, BRIX, DST vision, evare, lightning, and moxy. The company was founded by William Charles Stone in March 1986 and is headquartered in Windsor, CT.

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.