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Supply Chain Risk

Microsoft (NASDAQ:MSFT) and SPS Commerce (NASDAQ:SPSC) Financial Contrast

SPS Commerce (NASDAQ:SPSC) and Microsoft (NASDAQ:MSFT) are both business services companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, risk, earnings, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of current ratings for SPS Commerce and Microsoft, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SPS Commerce 0 0 6 1 3.14
Microsoft 0 0 29 1 3.03

SPS Commerce currently has a consensus price target of $60.58, indicating a potential upside of 7.55%. Microsoft has a consensus price target of $159.89, indicating a potential upside of 5.62%. Given SPS Commerce’s stronger consensus rating and higher probable upside, analysts clearly believe SPS Commerce is more favorable than Microsoft.

Volatility and Risk

SPS Commerce has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Microsoft has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

Earnings & Valuation

This table compares SPS Commerce and Microsoft’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SPS Commerce $248.24 million 7.91 $23.87 million $0.61 92.34
Microsoft $125.84 billion 9.18 $39.24 billion $4.75 31.87

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

Institutional and Insider Ownership

96.6% of SPS Commerce shares are owned by institutional investors. Comparatively, 71.8% of Microsoft shares are owned by institutional investors. 3.3% of SPS Commerce shares are owned by company insiders. Comparatively, 1.4% of Microsoft shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Microsoft pays an annual dividend of $2.04 per share and has a dividend yield of 1.3%. SPS Commerce does not pay a dividend. Microsoft pays out 42.9% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
SPS Commerce 11.67% 9.80% 7.97%
Microsoft 31.66% 39.14% 14.23%

Summary

Microsoft beats SPS Commerce on 10 of the 16 factors compared between the two stocks.

About SPS Commerce

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It offers solutions through the SPS Commerce platform, a cloud-based platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill orders, administer sell-through performance, and source new items. The company offers Trading Partner Community solution, which enables retailers, grocers, and distributors to introduce changes to their supply chain requirements to their trading partner community, and onboard new vendors to receive their first orders; Trading Partner Fulfillment solution that provides fulfillment automation and replaces or augments an organization’s existing staff and trading partner electronic communication infrastructure; and Trading Partner Assortment solution to manage individual attributes associated with each item a retailer or supplier sells. It also provides Trading Partner Analytics solution, which consists of data analytics applications that allow customers to enhance their visibility and analysis of their supply chains; Trading Partner Sourcing solutions that enables retailers to source providers of new items, suppliers to connect with new retailers, and retailing community; and Other Trading Partner Solutions, such as barcode labeling, planogram services, and scan and pack application that helps trading partners process information to streamline the picking and packaging process. The company sells its solutions through retailer, supplier, and logistic sales representatives to small- to mid-sized suppliers, as well as retailers, distributors, third-party logistics providers, and other trading partners. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

About Microsoft

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. Its company’s Productivity and Business Processes segment offers Office 365 commercial products and services, such as Office, Exchange, SharePoint, Skype for Business, Microsoft Teams, and related Client Access Licenses (CALs); Office 365 consumer services, including Skype, Outlook.com, and OneDrive; LinkedIn online professional network; and Dynamics business solutions comprising financial management, enterprise resource planning, customer relationship management, supply chain management, and analytics applications for small and medium businesses, large organizations, and divisions of enterprises. The company’s Intelligent Cloud segment licenses server products and cloud services, such as SQL Server, Windows Server, Visual Studio, System Center, and related CALs, as well as Azure, a cloud platform; and enterprise services, including premier support and Microsoft consulting services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions, as well as provides training and certification to developers and IT professionals. Its More Personal Computing segment offers Windows OEM, volume, and other non-volume licensing of the Windows operating system; patent licensing, Windows Internet of Things, and MSN display advertising; devices comprising Surface, PC accessories, and other intelligent devices; Xbox hardware and software and services; and Bing and Bing Ads search advertising. It markets its products through original equipment manufacturers, distributors, and resellers; and online and Microsoft retail stores. Microsoft Corporation has collaboration with E.ON, NIIT Technologies Ltd., and CUNA Mutual Group; strategic alliance with Nielsen Holdings plc and PAREXEL International Corp.; and a strategic collaboration with Mastercard Incorporated. The company was founded in 1975 and is headquartered in Redmond, Washington.



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