465.95 USD
+14.81 (+3.28%)
466.7 USD
+0.75 (+0.16%)
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 278 industry peers in the Software industry. MSFT has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. MSFT has a correct valuation and a medium growth rate. MSFT also has an excellent dividend rating. This makes MSFT very considerable for dividend and quality investing!
1. Profitability
1.1 Basic Checks
- In the past year MSFT was profitable.
- MSFT had a positive operating cash flow in the past year.
- In the past 5 years MSFT has always been profitable.
- MSFT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- MSFT has a better Return On Assets (16.49%) than 92.81% of its industry peers.
- Looking at the Return On Equity, with a value of 28.90%, MSFT belongs to the top of the industry, outperforming 92.09% of the companies in the same industry.
- The Return On Invested Capital of MSFT (22.25%) is better than 94.96% of its industry peers.
- MSFT had an Average Return On Invested Capital over the past 3 years of 22.94%. This is significantly above the industry average of 10.74%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.49% | ||
| ROE | 28.9% | ||
| ROIC | 22.25% |
ROA(3y)17.07%
ROA(5y)17.9%
ROE(3y)32.52%
ROE(5y)36.88%
ROIC(3y)22.94%
ROIC(5y)23.52%
1.3 Margins
- MSFT has a Profit Margin of 35.71%. This is amongst the best in the industry. MSFT outperforms 91.73% of its industry peers.
- In the last couple of years the Profit Margin of MSFT has grown nicely.
- With an excellent Operating Margin value of 46.27%, MSFT belongs to the best of the industry, outperforming 96.76% of the companies in the same industry.
- MSFT's Operating Margin has improved in the last couple of years.
- Looking at the Gross Margin, with a value of 68.76%, MSFT is in line with its industry, outperforming 50.72% of the companies in the same industry.
- MSFT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 46.27% | ||
| PM (TTM) | 35.71% | ||
| GM | 68.76% |
OM growth 3Y2.75%
OM growth 5Y4.26%
PM growth 3Y-0.49%
PM growth 5Y3.14%
GM growth 3Y0.21%
GM growth 5Y0.31%
2. Health
2.1 Basic Checks
- MSFT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
- MSFT has about the same amout of shares outstanding than it did 1 year ago.
- MSFT has less shares outstanding than it did 5 years ago.
- The debt/assets ratio for MSFT has been reduced compared to a year ago.
2.2 Solvency
- An Altman-Z score of 9.43 indicates that MSFT is not in any danger for bankruptcy at the moment.
- With an excellent Altman-Z score value of 9.43, MSFT belongs to the best of the industry, outperforming 89.93% of the companies in the same industry.
- The Debt to FCF ratio of MSFT is 1.25, which is an excellent value as it means it would take MSFT, only 1.25 years of fcf income to pay off all of its debts.
- MSFT has a better Debt to FCF ratio (1.25) than 73.02% of its industry peers.
- MSFT has a Debt/Equity ratio of 0.24. This is a healthy value indicating a solid balance between debt and equity.
- MSFT's Debt to Equity ratio of 0.24 is in line compared to the rest of the industry. MSFT outperforms 43.17% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.43 |
ROIC/WACC2.02
WACC11.01%
2.3 Liquidity
- MSFT has a Current Ratio of 1.40. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
- With a Current ratio value of 1.40, MSFT perfoms like the industry average, outperforming 43.53% of the companies in the same industry.
- MSFT has a Quick Ratio of 1.39. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
- MSFT has a Quick ratio (1.39) which is comparable to the rest of the industry.
- The current and quick ratio evaluation for MSFT is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.4 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an nice 19.39% over the past year.
- The Earnings Per Share has been growing by 18.86% on average over the past years. This is quite good.
- MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.59%.
- MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.52% yearly.
EPS 1Y (TTM)19.39%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%25.15%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
3.2 Future
- MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 18.83% yearly.
- The Revenue is expected to grow by 15.04% on average over the next years. This is quite good.
EPS Next Y22.79%
EPS Next 2Y18.47%
EPS Next 3Y18.31%
EPS Next 5Y18.83%
Revenue Next Year17.06%
Revenue Next 2Y15.95%
Revenue Next 3Y16.12%
Revenue Next 5Y15.04%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
- The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 32.20, MSFT can be considered very expensive at the moment.
- MSFT's Price/Earnings ratio is in line with the industry average.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, MSFT is valued at the same level.
- A Price/Forward Earnings ratio of 24.34 indicates a rather expensive valuation of MSFT.
- 65.47% of the companies in the same industry are more expensive than MSFT, based on the Price/Forward Earnings ratio.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, MSFT is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.2 | ||
| Fwd PE | 24.34 |
4.2 Price Multiples
- 76.98% of the companies in the same industry are more expensive than MSFT, based on the Enterprise Value to EBITDA ratio.
- Based on the Price/Free Cash Flow ratio, MSFT is valued a bit cheaper than 60.07% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 44.39 | ||
| EV/EBITDA | 19.26 |
4.3 Compensation for Growth
- MSFT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- MSFT has an outstanding profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as MSFT's earnings are expected to grow with 18.31% in the coming years.
PEG (NY)1.41
PEG (5Y)1.71
EPS Next 2Y18.47%
EPS Next 3Y18.31%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.81%, MSFT is not a good candidate for dividend investing.
- MSFT's Dividend Yield is rather good when compared to the industry average which is at 0.54. MSFT pays more dividend than 90.65% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.81, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.81% |
5.2 History
- On average, the dividend of MSFT grows each year by 10.24%, which is quite nice.
- MSFT has paid a dividend for at least 10 years, which is a reliable track record.
- MSFT has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)10.24%
Div Incr Years20
Div Non Decr Years20
5.3 Sustainability
- MSFT pays out 23.52% of its income as dividend. This is a sustainable payout ratio.
- The dividend of MSFT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP23.52%
EPS Next 2Y18.47%
EPS Next 3Y18.31%
MICROSOFT CORP / MSFT FAQ
Can you provide the ChartMill fundamental rating for MICROSOFT CORP?
ChartMill assigns a fundamental rating of 7 / 10 to MSFT.
Can you provide the valuation status for MICROSOFT CORP?
ChartMill assigns a valuation rating of 4 / 10 to MICROSOFT CORP (MSFT). This can be considered as Fairly Valued.
Can you provide the profitability details for MICROSOFT CORP?
MICROSOFT CORP (MSFT) has a profitability rating of 8 / 10.
What is the financial health of MICROSOFT CORP (MSFT) stock?
The financial health rating of MICROSOFT CORP (MSFT) is 8 / 10.
What is the expected EPS growth for MICROSOFT CORP (MSFT) stock?
The Earnings per Share (EPS) of MICROSOFT CORP (MSFT) is expected to grow by 22.79% in the next year.