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 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!
1. Profitability
1.1 Basic Checks
- MSFT had positive earnings in the past year.
- MSFT had a positive operating cash flow in the past year.
- Each year in the past 5 years MSFT has been profitable.
- In the past 5 years MSFT always reported a positive cash flow from operatings.
1.2 Ratios
- With an excellent Return On Assets value of 16.49%, MSFT belongs to the best of the industry, outperforming 92.81% of the companies in the same industry.
- With an excellent Return On Equity value of 28.90%, MSFT belongs to the best of the industry, outperforming 92.09% of the companies in the same industry.
- MSFT has a Return On Invested Capital of 22.25%. This is amongst the best in the industry. MSFT outperforms 94.96% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for MSFT 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
- Looking at the Profit Margin, with a value of 35.71%, MSFT belongs to the top of the industry, outperforming 91.73% of the companies in the same industry.
- MSFT's Profit Margin has improved in the last couple of years.
- MSFT's Operating Margin of 46.27% is amongst the best of the industry. MSFT outperforms 96.76% of its industry peers.
- In the last couple of years the Operating Margin of MSFT has grown nicely.
- MSFT's Gross Margin of 68.76% is in line compared to the rest of the industry. MSFT outperforms 50.72% of its industry peers.
- 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 | 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
- The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MSFT is creating value.
- Compared to 1 year ago, MSFT has about the same amount of shares outstanding.
- 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.
2.2 Solvency
- An Altman-Z score of 9.43 indicates that MSFT is not in any danger for bankruptcy at the moment.
- MSFT's Altman-Z score of 9.43 is amongst the best of the industry. MSFT outperforms 89.93% 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 has a Debt to FCF ratio of 1.25. This is in the better half of the industry: MSFT outperforms 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
- A Current Ratio of 1.40 indicates that MSFT should not have too much problems paying its short term obligations.
- MSFT's Current ratio of 1.40 is in line compared to the rest of the industry. MSFT outperforms 43.53% of its industry peers.
- A Quick Ratio of 1.39 indicates that MSFT should not have too much problems paying its short term obligations.
- With a Quick ratio value of 1.39, MSFT perfoms like the industry average, outperforming 43.53% of the companies in the same 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
- MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 19.39%, 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.
- MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.59%.
- Measured over the past years, MSFT shows a quite strong growth in Revenue. The Revenue has been growing by 14.52% on average per year.
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
- Based on estimates for the next years, MSFT will show a quite strong growth in Earnings Per Share. The EPS will grow by 18.83% on average per year.
- 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.
- 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
- MSFT is valuated quite expensively with a Price/Earnings ratio of 32.20.
- The rest of the industry has a similar Price/Earnings ratio as MSFT.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, MSFT is valued at the same level.
- Based on the Price/Forward Earnings ratio of 24.34, the valuation of MSFT can be described as rather expensive.
- Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than the industry average as 65.47% of the companies are valued more expensively.
- The average S&P500 Price/Forward Earnings ratio is at 25.98. MSFT is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.2 | ||
| Fwd PE | 24.34 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than the industry average as 76.98% of the companies are valued more expensively.
- 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.
- MSFT's earnings are expected to grow with 18.31% in the coming years. This may justify a more expensive valuation.
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
- The dividend of MSFT is nicely growing with an annual growth rate of 10.24%!
- MSFT has been paying a dividend for at least 10 years, so it has 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
- 23.52% 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.
DP23.52%
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 5 / 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.