Software Industry Report
Market Cap: $6.8T
Stocks: 215
Median P/E: 0.0x
Median ROIC: 1.6%
Data sourced from SEC EDGAR filings. Report refreshed weekly.
Part of the Technology sector.
Performance Dashboard
| Period | Sector (MCW) | Sector (Median) |
|---|---|---|
| 1 Day | -1.0% | +1.0% |
| 1 Week | -2.8% | +3.2% |
| 1 Month | — | — |
| 3 Months | — | — |
| 6 Months | — | — |
| YTD | -0.7% | +0.9% |
| 1 Year | -17.4% | -26.7% |
| 3 Years | +60.2% | -17.1% |
| 5 Years | +45.8% | -54.4% |
Today's Breadth: 119 advancing · 56 declining · 16 flat
Valuation Summary
| Metric | Median | P25 | P75 | vs 5Y Avg |
|---|---|---|---|---|
| P/E | 0.0x | 0.0x | 27.0x | -100% |
| P/B | 1.8x | 0.0x | 6.4x | -62% |
| P/S | 1.3x | 0.0x | 4.5x | — |
| P/FCF | 13.4x | 0.0x | 25.1x | — |
| EV/EBITDA | 21.6x | 11.7x | 36.5x | — |
| EV/EBIT | 21.7x | 13.4x | 39.3x | — |
Earnings Yield
3.4%
FCF Yield
3.9%
Below Fair Value
57% of stocks
Profitability Profile
Margins
| Metric | Median | 5Y Avg | P25 | P75 |
|---|---|---|---|---|
| Gross Margin | 66.0% | 62.4% | 48.6% | 74.8% |
| Operating Margin | 1.9% | — | -9.7% | 15.4% |
| Net Margin | 1.5% | -7.1% | -8.4% | 12.8% |
| FCF Margin | 16.3% | — | 6.2% | 25.3% |
Returns on Capital
| Metric | Median | 5Y Avg | P25 | P75 |
|---|---|---|---|---|
| ROE | 4.6% | — | -13.4% | 20.3% |
| ROA | 0.3% | — | -8.3% | 7.5% |
| ROIC | 1.6% | -4.5% | -12.3% | 14.7% |
Growth Metrics
| Metric | 1Y | 3Y CAGR | 5Y CAGR |
|---|---|---|---|
| Revenue | +10.2% | +11.0% | +15.9% |
| EPS | +22.7% | +13.4% | +13.5% |
| Free Cash Flow | +23.7% | +20.0% | +16.6% |
All values represent sector median growth rates.
Balance Sheet Health
Debt / Equity
0.3x
Net Debt / EBITDA
-0.2x
Interest Coverage
2.1x
Current Ratio
1.4x
Altman Z-Score
Safe (>3): 52 (29%)
Gray (1.8–3): 32 (18%)
Distress (<1.8): 96 (53%)
Piotroski F-Score
Strong (7–9): 47 (22%)
Moderate (4–6): 127 (59%)
Weak (0–3): 40 (19%)
Top Companies
| Symbol | #▲ | Mkt Cap | P/E | EV/EBITDA | ROIC | Net Mgn | Rev Gr. | Div Yld | YTD | Qual. |
|---|---|---|---|---|---|---|---|---|---|---|
| MSFT | 1 | $2.9T | 36.1x | 23.3x | 35.8% | 36.1% | +14.9% | 0.7% | -0.5% | 6/9 |
| NOW | 2 | $556.4B | 92.2x | 61.4x | 43.1% | 13.2% | +20.9% | — | +0.8% | 6/9 |
| NTES | 3 | $409.5B | — | — | 33.6% | 4.3% | +7.0% | — | +0.7% | 5/9 |
| ORCL | 4 | $408.6B | — | — | 63.1% | 25.2% | +17.4% | — | -10.0% | 5/9 |
| PLTR | 5 | $333.5B | 299.5x | — | — | 36.3% | +56.2% | — | -5.0% | 2/9 |
| SAP | 6 | $189.4B | 34.6x | — | 22.8% | 19.9% | +12.8% | 1.1% | +1.9% | 3/9 |
| CRM | 7 | $158.8B | 29.2x | 23.8x | 10.5% | 18.0% | +9.6% | 0.7% | +1.8% | 5/9 |
| SHOP | 8 | $156.4B | 181.7x | — | 16.3% | 10.7% | +30.1% | — | -12.4% | 3/9 |
| CDNS | 9 | $101.9B | 78.5x | 48.6x | 23.7% | 20.9% | +14.1% | — | -4.3% | 5/9 |
| ADBE | 10 | $93.8B | 19.2x | 14.3x | 60.4% | 30.0% | +10.5% | — | +0.9% | 8/9 |
| DDOG | 11 | $90.5B | 446.2x | — | 2.6% | 3.1% | +27.7% | — | +0.6% | 4/9 |
| SNOW | 12 | $87.7B | — | — | -28.1% | -28.4% | +29.2% | — | +6.6% | 1/9 |
| NET | 13 | $85.5B | — | — | -3.5% | -4.7% | +29.9% | — | +14.6% | 1/9 |
| INTU | 14 | $77.9B | 58.2x | 40.4x | 18.3% | 20.6% | +15.6% | 0.5% | +1.7% | 5/9 |
| SNPS | 15 | $72.4B | 56.8x | 54.7x | 4.0% | 18.9% | +15.1% | — | -0.1% | 5/9 |
| EA | 16 | $51.9B | — | — | 15.9% | 11.8% | +0.9% | — | +0.8% | 3/9 |
| XYZ | 17 | $49.0B | 31.6x | 17.8x | 5.9% | 5.4% | +0.3% | — | +3.6% | 5/9 |
| CRWD | 18 | $48.5B | — | — | -3.5% | -3.4% | +21.7% | — | -1.9% | 2/9 |
| TTWO | 19 | $46.9B | — | — | -5.6% | -4.5% | +18.2% | — | -1.6% | 1/9 |
| BSQKZ | 20 | $46.6B | 37.7x | 21.6x | 5.9% | 5.4% | +0.3% | — | 0.0% | 5/9 |
Industry Composition
| Industry | Stocks | Market Cap | % | |
|---|---|---|---|---|
| Services-Prepackaged Software | 173 | $6.6T | 97.1% | |
| Services-Computer Programming Services | 21 | $157.9B | 2.3% | |
| Software - Application | 15 | $35.3B | 0.5% | |
| Software - Infrastructure | 6 | $5.0B | 0.1% |
Quality Distribution
0
1
2
3
4
5
6
7
8
9
Quality Score (0-9)
High Quality (7+)
5%
Median Piotroski F
5/9
Profitable Years
2 of 10
Dividends & Shareholder Returns
Paying Dividends
11%
Median Div Yield
1.5%
Median Buyback Yield
0.0%
Shareholder Yield
0.0%
Payout Ratio
33.7%
Div Growth (3Y)
8.6%
Div Growth (5Y)
9.9%
Strengths & Weaknesses
Strengths
- +[Cash Flow]Robust cash generation improvement with a median 5-year FCF CAGR of 16.6%, supporting capital returns and reinvestment capacity.
- +[Growth]Strong secular growth with a median 5-year revenue CAGR of 15.9%, outpacing nominal GDP.
- +[Profitability]High pricing power with a median gross margin of 66.0%, reflecting differentiated products or strong brand moats.
- +[Valuation]Attractive valuations: current median P/E of 0.0x is 100.0% below the 5-year average, presenting potential value opportunity.
Weaknesses
- −[Financial Health]53.3% of companies fall in the Altman Z-Score distress zone (<1.8), indicating elevated bankruptcy risk within the sector.
- −[Leverage]Tight interest coverage at 2.1x, leaving limited cushion for debt servicing if earnings decline.
- −[Profitability]Below-average capital returns with a median ROIC of 1.6%, suggesting limited pricing power or capital-intensive operations.
- −[Profitability]Razor-thin net margins at a median of 1.5%, leaving little room for execution error or economic downturn.