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MICROSOFT CORP (MSFT) Stock Fundamental Analysis

NASDAQ:MSFT - Nasdaq - US5949181045 - Common Stock - Currency: USD

474.96  -3.91 (-0.82%)

After market: 474.184 -0.78 (-0.16%)

Fundamental Rating

7

Overall MSFT gets a fundamental rating of 7 out of 10. We evaluated MSFT against 284 industry peers in the Software industry. Both the health and profitability get an excellent rating, making MSFT a very profitable company, without any liquidiy or solvency issues. MSFT has a decent growth rate and is not valued too expensively. Finally MSFT also has an excellent dividend rating. These ratings would make MSFT suitable for dividend and quality investing!


Dividend Valuation Growth Profitability Health

8

1. Profitability

1.1 Basic Checks

In the past year MSFT was profitable.
MSFT had a positive operating cash flow in the past year.
MSFT had positive earnings in each of the past 5 years.
In the past 5 years MSFT always reported a positive cash flow from operatings.
MSFT Yearly Net Income VS EBIT VS OCF VS FCFMSFT Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B

1.2 Ratios

MSFT's Return On Assets of 17.18% is amongst the best of the industry. MSFT outperforms 92.61% of its industry peers.
MSFT's Return On Equity of 30.02% is amongst the best of the industry. MSFT outperforms 90.85% of its industry peers.
MSFT has a Return On Invested Capital of 22.17%. This is amongst the best in the industry. MSFT outperforms 95.07% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MSFT is significantly above the industry average of 12.30%.
Industry RankSector Rank
ROA 17.18%
ROE 30.02%
ROIC 22.17%
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
MSFT Yearly ROA, ROE, ROICMSFT Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10 20 30 40

1.3 Margins

MSFT has a better Profit Margin (35.79%) than 96.13% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
Looking at the Operating Margin, with a value of 45.23%, MSFT belongs to the top of the industry, outperforming 98.94% of the companies in the same industry.
MSFT's Operating Margin has improved in the last couple of years.
The Gross Margin of MSFT (69.07%) is comparable to the rest of the industry.
MSFT's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 45.23%
PM (TTM) 35.79%
GM 69.07%
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
MSFT Yearly Profit, Operating, Gross MarginsMSFT Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60

8

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MSFT is creating value.
The number of shares outstanding for MSFT remains at a similar level compared to 1 year ago.
The number of shares outstanding for MSFT has been reduced compared to 5 years ago.
MSFT has a better debt/assets ratio than last year.
MSFT Yearly Shares OutstandingMSFT Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B
MSFT Yearly Total Debt VS Total AssetsMSFT Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100B 200B 300B 400B 500B

2.2 Solvency

An Altman-Z score of 10.63 indicates that MSFT is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 10.63, MSFT belongs to the best of the industry, outperforming 86.97% of the companies in the same industry.
The Debt to FCF ratio of MSFT is 1.18, which is an excellent value as it means it would take MSFT, only 1.18 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.18, MSFT is in the better half of the industry, outperforming 73.59% of the companies in the same industry.
MSFT has a Debt/Equity ratio of 0.24. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.24, MSFT is in line with its industry, outperforming 45.42% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.24
Debt/FCF 1.18
Altman-Z 10.63
ROIC/WACC2.49
WACC8.91%
MSFT Yearly LT Debt VS Equity VS FCFMSFT Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B 200B 250B

2.3 Liquidity

MSFT has a Current Ratio of 1.37. 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 Current ratio (1.37) which is comparable to the rest of the industry.
A Quick Ratio of 1.36 indicates that MSFT should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.36, MSFT is in line with its industry, outperforming 43.66% of the companies in the same industry.
MSFT does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
Industry RankSector Rank
Current Ratio 1.37
Quick Ratio 1.36
MSFT Yearly Current Assets VS Current LiabilitesMSFT Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B

6

3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 12.03% over the past year.
MSFT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 19.98% yearly.
MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.13%.
MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.26% yearly.
EPS 1Y (TTM)12.03%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%17.69%
Revenue 1Y (TTM)14.13%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%13.27%

3.2 Future

Based on estimates for the next years, MSFT will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.57% on average per year.
Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 13.26% on average per year.
EPS Next Y15.38%
EPS Next 2Y14.13%
EPS Next 3Y15.04%
EPS Next 5Y15.57%
Revenue Next Year13.95%
Revenue Next 2Y13.71%
Revenue Next 3Y13.91%
Revenue Next 5Y13.26%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
MSFT Yearly Revenue VS EstimatesMSFT Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 200B 400B 600B
MSFT Yearly EPS VS EstimatesMSFT Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 10 20 30

4

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 36.70, the valuation of MSFT can be described as expensive.
MSFT's Price/Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 65.49% of the companies in the same industry.
MSFT's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 26.31.
Based on the Price/Forward Earnings ratio of 30.88, the valuation of MSFT can be described as expensive.
61.27% of the companies in the same industry are more expensive than MSFT, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of MSFT to the average of the S&P500 Index (22.13), we can say MSFT is valued slightly more expensively.
Industry RankSector Rank
PE 36.7
Fwd PE 30.88
MSFT Price Earnings VS Forward Price EarningsMSFT Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 79.23% of the companies listed in the same industry.
60.21% of the companies in the same industry are more expensive than MSFT, based on the Price/Free Cash Flow ratio.
Industry RankSector Rank
P/FCF 50.89
EV/EBITDA 22.99
MSFT Per share dataMSFT EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 10 20 30 40

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MSFT does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of MSFT may justify a higher PE ratio.
MSFT's earnings are expected to grow with 15.04% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.39
PEG (5Y)1.84
EPS Next 2Y14.13%
EPS Next 3Y15.04%

7

5. Dividend

5.1 Amount

MSFT has a yearly dividend return of 0.69%, which is pretty low.
Compared to an average industry Dividend Yield of 16.93, MSFT pays a better dividend. On top of this MSFT pays more dividend than 92.61% of the companies listed in the same industry.
With a Dividend Yield of 0.69, MSFT pays less dividend than the S&P500 average, which is at 2.40.
Industry RankSector Rank
Dividend Yield 0.69%

5.2 History

On average, the dividend of MSFT grows each year by 10.19%, which is quite nice.
MSFT has paid a dividend for at least 10 years, which is a reliable track record.
MSFT has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)10.19%
Div Incr Years20
Div Non Decr Years20
MSFT Yearly Dividends per shareMSFT Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1 2 3

5.3 Sustainability

24.30% of the earnings are spent on dividend by MSFT. This is a low number and sustainable payout ratio.
MSFT's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP24.3%
EPS Next 2Y14.13%
EPS Next 3Y15.04%
MSFT Yearly Income VS Free CF VS DividendMSFT Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B
MSFT Dividend Payout.MSFT Dividend Payout, showing the Payout Ratio.MSFT Dividend Payout.PayoutRetained Earnings

MICROSOFT CORP

NASDAQ:MSFT (6/13/2025, 8:24:18 PM)

After market: 474.184 -0.78 (-0.16%)

474.96

-3.91 (-0.82%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)04-30 2025-04-30/amc
Earnings (Next)07-28 2025-07-28/amc
Inst Owners74.47%
Inst Owner Change1.48%
Ins Owners0.03%
Ins Owner Change-0.03%
Market Cap3530.16B
Analysts84.64
Price Target516.4 (8.72%)
Short Float %0.77%
Short Ratio2.34
Dividend
Industry RankSector Rank
Dividend Yield 0.69%
Yearly Dividend2.93
Dividend Growth(5Y)10.19%
DP24.3%
Div Incr Years20
Div Non Decr Years20
Ex-Date05-15 2025-05-15 (0.83)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.56%
Min EPS beat(2)1.79%
Max EPS beat(2)5.34%
EPS beat(4)3
Avg EPS beat(4)2.53%
Min EPS beat(4)-1.43%
Max EPS beat(4)5.34%
EPS beat(8)7
Avg EPS beat(8)3.7%
EPS beat(12)9
Avg EPS beat(12)2.65%
EPS beat(16)12
Avg EPS beat(16)3.43%
Revenue beat(2)1
Avg Revenue beat(2)-0.18%
Min Revenue beat(2)-0.75%
Max Revenue beat(2)0.4%
Revenue beat(4)1
Avg Revenue beat(4)-0.53%
Min Revenue beat(4)-1.44%
Max Revenue beat(4)0.4%
Revenue beat(8)2
Avg Revenue beat(8)-0.25%
Revenue beat(12)3
Avg Revenue beat(12)-0.56%
Revenue beat(16)5
Avg Revenue beat(16)-0.31%
PT rev (1m)1.21%
PT rev (3m)0.69%
EPS NQ rev (1m)-0.06%
EPS NQ rev (3m)1.17%
EPS NY rev (1m)0%
EPS NY rev (3m)1.95%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.57%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.8%
Valuation
Industry RankSector Rank
PE 36.7
Fwd PE 30.88
P/S 13.07
P/FCF 50.89
P/OCF 27.01
P/B 10.97
P/tB 19.77
EV/EBITDA 22.99
EPS(TTM)12.94
EY2.72%
EPS(NY)15.38
Fwd EY3.24%
FCF(TTM)9.33
FCFY1.96%
OCF(TTM)17.59
OCFY3.7%
SpS36.33
BVpS43.31
TBVpS24.03
PEG (NY)2.39
PEG (5Y)1.84
Profitability
Industry RankSector Rank
ROA 17.18%
ROE 30.02%
ROCE 27.24%
ROIC 22.17%
ROICexc 26.95%
ROICexgc 44.08%
OM 45.23%
PM (TTM) 35.79%
GM 69.07%
FCFM 25.69%
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
ROICexc(3y)35.43%
ROICexc(5y)40.49%
ROICexgc(3y)63.99%
ROICexgc(5y)78.75%
ROCE(3y)29.44%
ROCE(5y)28%
ROICexcg growth 3Y-19.4%
ROICexcg growth 5Y-12.98%
ROICexc growth 3Y-17.33%
ROICexc growth 5Y-7.77%
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
F-Score5
Asset Turnover0.48
Health
Industry RankSector Rank
Debt/Equity 0.24
Debt/FCF 1.18
Debt/EBITDA 0.5
Cap/Depr 209.15%
Cap/Sales 22.72%
Interest Coverage 250
Cash Conversion 86.3%
Profit Quality 71.78%
Current Ratio 1.37
Quick Ratio 1.36
Altman-Z 10.63
F-Score5
WACC8.91%
ROIC/WACC2.49
Cap/Depr(3y)189.18%
Cap/Depr(5y)172.93%
Cap/Sales(3y)14.49%
Cap/Sales(5y)13.3%
Profit Quality(3y)85.27%
Profit Quality(5y)89.91%
High Growth Momentum
Growth
EPS 1Y (TTM)12.03%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%17.69%
EPS Next Y15.38%
EPS Next 2Y14.13%
EPS Next 3Y15.04%
EPS Next 5Y15.57%
Revenue 1Y (TTM)14.13%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%13.27%
Revenue Next Year13.95%
Revenue Next 2Y13.71%
Revenue Next 3Y13.91%
Revenue Next 5Y13.26%
EBIT growth 1Y15.48%
EBIT growth 3Y16.11%
EBIT growth 5Y20.56%
EBIT Next Year44.54%
EBIT Next 3Y24.22%
EBIT Next 5Y20.76%
FCF growth 1Y20.83%
FCF growth 3Y9.69%
FCF growth 5Y14.13%
OCF growth 1Y56.65%
OCF growth 3Y15.6%
OCF growth 5Y17.83%