Shopify Inc. (SHOP)vs CRM Holdings, Inc. (CRM)

Quick verdict

Shopify Inc. (SHOP) and CRM Holdings, Inc. (CRM) appeal to different investors. On our six-factor framework, SHOP scores 2 and CRM scores 4. CRM looks cheaper on the multiples that matter, while CRM grows faster and CRM earns higher returns on capital. Overall, CRM edges this comparison, but the right pick depends on whether you prioritise value, growth, income or balance-sheet safety.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Shopify Inc. operates in Software - Application (Technology), while CRM Holdings, Inc. sits in Oil & Gas Integrated (Energy). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. SHOP carries a beta of 2.58 versus 1.51 for CRM, meaning SHOP has historically been the more volatile of the two.

Valuation

On valuation, CRM is the cheaper stock. SHOP trades on a forward P/E of 16.83 and EV/EBITDA of 285.64, against 36.07 and 6.35 for CRM. Price-to-sales is 13.67 vs 4.31, and free-cash-flow yield is 2.0% vs 3.0%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

CRM is the faster grower. SHOP has compounded revenue at 30.1% over three years with EPS growth of -39.1%, while CRM has delivered 15.0% revenue and 13.0% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, CRM is stronger. SHOP posts a 13.3% operating margin, 10.5% return on equity and 10.4% return on invested capital. CRM posts 28.4%, 36.4% and 29.9% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

SHOP has the safer balance sheet. SHOP carries net-debt/EBITDA of 0.69x with a current ratio of 6.20, versus -1.37x and 1.70 for CRM. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year SHOP returned 42.9% against 85.7% for CRM; on a three-year annualised basis it is 16.6% vs 23.9%. SHOP yields 1.4% and CRM yields 0.0%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, CRM is the better fit on today's multiples. Growth investors will likely prefer CRM, which is expanding faster. Income investors should lean toward SHOP for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour CRM for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: CRM
• Growth: CRM
• Income: SHOP
• Quality: CRM

Frequently asked questions

Is SHOP or CRM the better buy right now?

Neither is universally "better." SHOP scores 2 and CRM scores 4 on our six-factor framework. CRM is cheaper, CRM grows faster, and CRM is higher quality — so the right pick depends on your objective.

Which stock is cheaper, SHOP or CRM?

CRM is the cheaper stock across forward P/E (16.83 vs 36.07), EV/EBITDA (285.64 vs 6.35) and price-to-sales (13.67 vs 4.31).

Which has grown faster, SHOP or CRM?

CRM has the stronger growth profile, with three-year revenue CAGR of 30.1% for SHOP versus 15.0% for CRM.

Which stock pays a bigger dividend?

SHOP yields 1.4% and CRM yields 0.0%, so SHOP is the stronger income choice.

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