Critical Contrast: Microsoft (NASDAQ:MSFT) & FalconStor Software (OTCMKTS:FALC)

Microsoft (NASDAQ:MSFT) and FalconStor Software (OTCMKTS:FALC) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, risk, dividends and institutional ownership.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microsoft	1	2	26	0	2.86
FalconStor Software	0	0	0	0	N/A

Microsoft currently has a consensus target price of $503.03, indicating a potential upside of 22.26%. Given Microsoft’s higher probable upside, analysts clearly believe Microsoft is more favorable than FalconStor Software.

Institutional & Insider Ownership

71.1% of Microsoft shares are owned by institutional investors. Comparatively, 9.5% of FalconStor Software shares are owned by institutional investors. 0.0% of Microsoft shares are owned by company insiders. Comparatively, 52.8% of FalconStor Software shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microsoft	$245.12 billion	12.48	$88.14 billion	$12.12	33.95
FalconStor Software	$11.60 million	0.89	$980,000.00	($0.01)	-144.86

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

Risk & Volatility

Microsoft has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, FalconStor Software has a beta of 2.16, meaning that its share price is 116% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Microsoft	35.61%	34.56%	18.19%
FalconStor Software	14.90%	-9.90%	15.87%

Summary

Microsoft beats FalconStor Software on 11 of the 13 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 FalconStor Software

FalconStor Software, Inc., a storage software company, enables enterprise customers and managed service providers to secure, migrate, and protect their data worldwide. It offers FalconStor Virtual Tape Library, a software that emulates and replaces cumbersome physical tape libraries for archive related data preservation without being replacing their enterprise backup and archive software and associated processes; FalconStor StorSafe, a long-term archive data management software; FalconStor Continuous Data Protector delivers instant data availability, and reliable recovery; and FalconStor Network Storage Server for data storage virtualization and business continuity in heterogeneous environments. The company also provides FalconStor StorSigh, a long-term archive and business continuity driven data replication from one centralized management point; FalconStor RecoverTrac Disaster Recovery Technology that streamlines the implementation, testing, and execution of disaster recovery operations; and FalconStor MicroScanTM Technology, which minimizes the amount of data transferred during replication by eliminating inefficiencies at the application and file system layer. It sells its products through authorized partners, value-added resellers, solution providers, system integrators, direct market resellers, distributors, managed service providers, cloud service providers, and original equipment manufacturers, as well as directly to customers. The company was incorporated in 1994 and is headquartered in Austin, Texas.