Microsoft (NASDAQ:MSFT) versus Elastic (NYSE:ESTC) Critical Comparison

Elastic (NYSE:ESTC) and Microsoft (NASDAQ:MSFT) are both technology companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent ratings for Elastic and Microsoft, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Elastic	0	13	15	1	2.59
Microsoft	0	5	42	0	2.89

Elastic currently has a consensus target price of $96.52, indicating a potential upside of 13.31%. Microsoft has a consensus target price of $564.27, indicating a potential upside of 15.09%. Given Microsoft’s stronger consensus rating and higher probable upside, analysts clearly believe Microsoft is more favorable than Elastic.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Elastic	$1.74 billion	5.14	$367.77 million	$3.57	23.86
Microsoft	$331.84 billion	10.97	$133.75 billion	$17.96	27.30

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

Risk and Volatility

Elastic has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, Microsoft has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Elastic	20.84%	-0.35%	-0.14%
Microsoft	40.31%	31.98%	18.70%

Insider and Institutional Ownership

97.0% of Elastic shares are held by institutional investors. Comparatively, 71.1% of Microsoft shares are held by institutional investors. 12.7% of Elastic shares are held by company insiders. Comparatively, 0.0% of Microsoft shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Microsoft beats Elastic on 12 of the 15 factors compared between the two stocks.

About Elastic

Elastic N.V., a data analytics company, delivers solutions designed to run in public or private clouds in multi-cloud environments. It primarily offers Elastic Stack, a set of software products that ingest and store data from various sources and formats, as well as performs search, analysis, and visualization on that data. The company's Elastic Stack product portfolio comprises Elasticsearch, a distributed, real-time search and analytics engine, and data store for various types of data, including textual, numerical, geospatial, structured, and unstructured; Kibana, a user interface, management, and configuration interface for the Elastic Stack; Elastic Agent that offers integrated host protection and central management services; Beats, a single-purpose data shippers for sending data from edge machines to Elasticsearch or Logstash; and Logstash, a data processing pipeline for ingesting data into Elasticsearch or other storage systems from a multitude of sources simultaneously. It also provides software solutions on the Elastic Stack that address cases, including search applications, workplace search, logs, metrics, application performance monitoring, synthetic monitoring, security information and event management (SIEM), endpoint security, extended detection and response, and cloud security. The company was incorporated in 2012 and is based in Amsterdam, the Netherlands.

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.