SAP (NYSE:SAP) and Synopsys (NASDAQ:SNPS) are both large-cap computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, risk, profitability, valuation, dividends and earnings.
Volatility and Risk
SAP has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Synopsys has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.
Institutional & Insider Ownership
4.9% of SAP shares are owned by institutional investors. Comparatively, 88.4% of Synopsys shares are owned by institutional investors. 7.4% of SAP shares are owned by company insiders. Comparatively, 1.9% of Synopsys shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a summary of current ratings and recommmendations for SAP and Synopsys, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| SAP | 1 | 5 | 10 | 0 | 2.56 |
| Synopsys | 0 | 0 | 10 | 1 | 3.09 |
SAP presently has a consensus target price of $137.50, suggesting a potential upside of 16.54%. Synopsys has a consensus target price of $179.00, suggesting a potential upside of 32.41%. Given Synopsys’ stronger consensus rating and higher possible upside, analysts plainly believe Synopsys is more favorable than SAP.
Earnings & Valuation
This table compares SAP and Synopsys’ gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| SAP | $30.86 billion | 4.56 | $3.72 billion | $4.02 | 29.35 |
| Synopsys | $3.36 billion | 6.06 | $532.37 million | $3.45 | 39.19 |
SAP has higher revenue and earnings than Synopsys. SAP is trading at a lower price-to-earnings ratio than Synopsys, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares SAP and Synopsys’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| SAP | 12.07% | 15.42% | 7.63% |
| Synopsys | 14.31% | 12.00% | 7.44% |
Summary
Synopsys beats SAP on 8 of the 14 factors compared between the two stocks.
About SAP
SAP SE operates as an enterprise application software, and analytics and business intelligence company worldwide. The company operates through three segments: Applications, Technology & Services; SAP Business Network; and Customer Experience. It offers SAP HANA, which enables businesses to process and analyze live data; SAP Data Hub, a solution for businesses to manage data from various sources; and SAP Cloud platform that offers an enterprise platform-as-a-service. The company also provides SAP Leonardo, a system that combines design thinking services with intelligent technologies for business processes; SAP Analytics Cloud, which leverages the intersection of business intelligence, planning, and predictive analytics; SAP BW/4HANA, a data warehouse solution; SAP S/4HANA, an enterprise resource planning suite for intelligent enterprises; SAP Integrated Business Planning solutions that deliver real-time supply chain planning capabilities; and SAP Business One, an on-premise and cloud business application. In addition, it offers SAP Fiori, an user experience interface; SAP SuccessFactors Human Capital Management solutions that help organizations enhance the value of their workforce; SAP Fieldglass, a cloud-based application for external workforce management and services procurement; SAP Ariba, an online business-to-business marketplace; and SAP Concur, a travel and expense management software. Further, the company provides SAP MaxAttention to turn ideas into value-based predictable outcomes; and SAP ActiveAttention program, a premium-level engagement solution to support smaller businesses. Additionally, it offers SAP Enterprise Support services that provides proactive, predictive, and preventive support for customers across hybrid landscapes; and SAP Preferred Success, which provides a bundle of prescriptive customer success activities for accelerated cloud adoption. SAP SE was founded in 1972 and is headquartered in Walldorf, Germany.
About Synopsys
Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits (ICs). It offers Fusion Design Platform, a digital design implementation solution; Verification Continuum Platform, which provides virtual prototyping, static and formal verification, simulation, emulation, field-programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. The company also offers intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, SATA, MIPI, HDMI, and Bluetooth low energy applications; analog IP, including data converters and audio codecs; and system-on-chip infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating point components, and ARM AMBA interconnect fabric and peripherals. In addition, it provides logic libraries and embedded memories; configurable processor cores and application-specific instruction-set processor tools for embedded applications; IP subsystems for audio, sensor, and data fusion functionality; and security IP solutions. Further, the company offers Platform Architect tools for SoC architecture analysis and optimization; virtual prototyping solutions; and HAPS FPGA-based prototyping systems, as well as a series of tools used in the design of optical systems and photonic devices. Additionally, it provides testing tools, services, and programs, which include security testing, managed services, programs and professional services, and training that enable its customers to detect and remediate defects in the software development lifecycle; manufacturing solutions for semiconductor manufacturers to develop fabrication processes; and professional and other services. Synopsys, Inc. has collaboration with Palma Ceia SemiDesign, Inc. to provide ready-to-use NB-IoT solution. The company was founded in 1986 and is headquartered in Mountain View, California.
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