MICROSOFT CORP (MSFT) Stock Fundamental Analysis
NASDAQ:MSFT - US5949181045 - Common Stock
507.23 USD
+2.99 (+0.59%)
506.95 USD
-0.28 (-0.06%)
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 282 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. While showing a medium growth rate, MSFT is valued expensive at the moment. MSFT also has an excellent dividend rating. This makes MSFT very considerable for dividend and quality investing!
1. Profitability
1.1 Basic Checks
MSFT had positive earnings in the past year.
In the past year MSFT had a positive cash flow from operations.
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.
1.2 Ratios
MSFT has a better Return On Assets (16.45%) than 92.20% of its industry peers.
MSFT has a better Return On Equity (29.65%) than 91.84% of its industry peers.
Looking at the Return On Invested Capital, with a value of 22.08%, MSFT belongs to the top of the industry, outperforming 94.33% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 11.99%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.45% | ||
| ROE | 29.65% | ||
| ROIC | 22.08% |
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 better Profit Margin (36.15%) than 92.91% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT's Operating Margin of 45.62% is amongst the best of the industry. MSFT outperforms 96.81% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
MSFT has a Gross Margin (68.82%) which is comparable to the rest of the industry.
In the last couple of years the Gross Margin of MSFT has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 45.62% | ||
| PM (TTM) | 36.15% | ||
| GM | 68.82% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MSFT 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
MSFT has an Altman-Z score of 9.99. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
MSFT has a Altman-Z score of 9.99. This is amongst the best in the industry. MSFT outperforms 87.23% of its industry peers.
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's Debt to FCF ratio of 1.25 is fine compared to the rest of the industry. MSFT outperforms 73.40% of its industry peers.
A Debt/Equity ratio of 0.24 indicates that MSFT is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.24, MSFT is in line with its industry, outperforming 43.26% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.99 |
ROIC/WACC1.98
WACC11.17%
2.3 Liquidity
MSFT has a Current Ratio of 1.35. 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 of 1.35. This is comparable to the rest of the industry: MSFT outperforms 44.33% of its industry peers.
A Quick Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio (1.35) which is in line with its industry peers.
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 | 1.35 | ||
| Quick Ratio | 1.35 |
3. Growth
3.1 Past
MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.50%, which is quite good.
MSFT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.86% yearly.
Looking at the last year, MSFT shows a quite strong growth in Revenue. The Revenue has grown by 14.93% in the last year.
The Revenue has been growing by 14.52% on average over the past years. This is quite good.
EPS 1Y (TTM)15.5%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%23.73%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
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 15.23% 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 11.89% on average per year.
EPS Next Y15.95%
EPS Next 2Y16.49%
EPS Next 3Y17.21%
EPS Next 5Y15.23%
Revenue Next Year15.5%
Revenue Next 2Y14.92%
Revenue Next 3Y14.9%
Revenue Next 5Y11.89%
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.
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.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 37.19, MSFT can be considered very expensive at the moment.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 62.06% 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 27.24.
Based on the Price/Forward Earnings ratio of 32.07, the valuation of MSFT can be described as expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 60.99% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.81. MSFT is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.19 | ||
| Fwd PE | 32.07 |
4.2 Price Multiples
MSFT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 78.01% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MSFT is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.65 | ||
| EV/EBITDA | 22.75 |
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 17.21% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.33
PEG (5Y)1.97
EPS Next 2Y16.49%
EPS Next 3Y17.21%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.66%, which is pretty low.
MSFT's Dividend Yield is rather good when compared to the industry average which is at 56.88. MSFT pays more dividend than 91.49% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.24%!
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
23.65% 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.
DP23.65%
EPS Next 2Y16.49%
EPS Next 3Y17.21%
507.23
+2.99 (+0.59%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.49%
Inst Owner Change12.45%
Ins Owners0.03%
Ins Owner Change-0.04%
Market Cap3770.33B
Analysts85.29
Price Target615.98 (21.44%)
Short Float %0.71%
Short Ratio2.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
Yearly Dividend3.24
Dividend Growth(5Y)10.24%
DP23.65%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.77%
Min EPS beat(2)5.34%
Max EPS beat(2)6.2%
EPS beat(4)4
Avg EPS beat(4)4.44%
Min EPS beat(4)1.79%
Max EPS beat(4)6.2%
EPS beat(8)7
Avg EPS beat(8)4.04%
EPS beat(12)10
Avg EPS beat(12)3.55%
EPS beat(16)12
Avg EPS beat(16)3.12%
Revenue beat(2)2
Avg Revenue beat(2)0.97%
Min Revenue beat(2)0.4%
Max Revenue beat(2)1.54%
Revenue beat(4)2
Avg Revenue beat(4)0.21%
Min Revenue beat(4)-0.75%
Max Revenue beat(4)1.54%
Revenue beat(8)3
Avg Revenue beat(8)0.03%
Revenue beat(12)4
Avg Revenue beat(12)-0.18%
Revenue beat(16)5
Avg Revenue beat(16)-0.36%
PT rev (1m)14.12%
PT rev (3m)20.72%
EPS NQ rev (1m)2.79%
EPS NQ rev (3m)3.37%
EPS NY rev (1m)2.74%
EPS NY rev (3m)2.81%
Revenue NQ rev (1m)1.84%
Revenue NQ rev (3m)2.31%
Revenue NY rev (1m)1.79%
Revenue NY rev (3m)1.81%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.19 | ||
| Fwd PE | 32.07 | ||
| P/S | 13.38 | ||
| P/FCF | 52.65 | ||
| P/OCF | 27.69 | ||
| P/B | 10.98 | ||
| P/tB | 18.72 | ||
| EV/EBITDA | 22.75 |
EPS(TTM)13.64
EY2.69%
EPS(NY)15.81
Fwd EY3.12%
FCF(TTM)9.63
FCFY1.9%
OCF(TTM)18.32
OCFY3.61%
SpS37.9
BVpS46.21
TBVpS27.09
PEG (NY)2.33
PEG (5Y)1.97
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.45% | ||
| ROE | 29.65% | ||
| ROCE | 26.9% | ||
| ROIC | 22.08% | ||
| ROICexc | 27.53% | ||
| ROICexgc | 43.75% | ||
| OM | 45.62% | ||
| PM (TTM) | 36.15% | ||
| GM | 68.82% | ||
| FCFM | 25.42% |
ROA(3y)17.07%
ROA(5y)17.9%
ROE(3y)32.52%
ROE(5y)36.88%
ROIC(3y)22.94%
ROIC(5y)23.52%
ROICexc(3y)31.07%
ROICexc(5y)36.94%
ROICexgc(3y)52.63%
ROICexgc(5y)67.5%
ROCE(3y)28.11%
ROCE(5y)28.75%
ROICexcg growth 3Y-18.02%
ROICexcg growth 5Y-15.78%
ROICexc growth 3Y-12.77%
ROICexc growth 5Y-10.15%
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%
F-Score5
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Debt/EBITDA | 0.51 | ||
| Cap/Depr | 189.01% | ||
| Cap/Sales | 22.91% | ||
| Interest Coverage | 80.33 | ||
| Cash Conversion | 83.7% | ||
| Profit Quality | 70.32% | ||
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.35 | ||
| Altman-Z | 9.99 |
F-Score5
WACC11.17%
ROIC/WACC1.98
Cap/Depr(3y)197.12%
Cap/Depr(5y)186.6%
Cap/Sales(3y)18.11%
Cap/Sales(5y)15.73%
Profit Quality(3y)78.85%
Profit Quality(5y)83.54%
High Growth Momentum
Growth
EPS 1Y (TTM)15.5%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%23.73%
EPS Next Y15.95%
EPS Next 2Y16.49%
EPS Next 3Y17.21%
EPS Next 5Y15.23%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
Revenue Next Year15.5%
Revenue Next 2Y14.92%
Revenue Next 3Y14.9%
Revenue Next 5Y11.89%
EBIT growth 1Y17.45%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year49.13%
EBIT Next 3Y27.48%
EBIT Next 5Y25.57%
FCF growth 1Y-3.32%
FCF growth 3Y3.2%
FCF growth 5Y9.62%
OCF growth 1Y14.86%
OCF growth 3Y15.21%
OCF growth 5Y17.55%