MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
543.58 USD
+12.06 (+2.27%)
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 285 industry peers in the Software industry. MSFT gets an excellent profitability rating and is at the same time showing great financial health properties. While showing a medium growth rate, MSFT is valued expensive at the moment. Finally 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.
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 Return On Assets of 16.45%. This is amongst the best in the industry. MSFT outperforms 91.58% of its industry peers.
Looking at the Return On Equity, with a value of 29.65%, MSFT belongs to the top of the industry, outperforming 91.58% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 22.08%, MSFT belongs to the top of the industry, outperforming 94.04% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for MSFT is significantly above the industry average of 11.88%.
| 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's Profit Margin of 36.15% is amongst the best of the industry. MSFT outperforms 92.63% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT has a Operating Margin of 45.62%. This is amongst the best in the industry. MSFT outperforms 96.84% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
The Gross Margin of MSFT (68.82%) is comparable to the rest of the industry.
MSFT's Gross Margin has been stable in the last couple of years.
| 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
MSFT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, MSFT has about the same amount of shares outstanding.
Compared to 5 years ago, MSFT has less shares outstanding
The debt/assets ratio for MSFT has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 10.38 indicates that MSFT is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 10.38, MSFT belongs to the top of the industry, outperforming 85.61% 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.
With a decent Debt to FCF ratio value of 1.25, MSFT is doing good in the industry, outperforming 73.68% 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.
MSFT has a Debt to Equity ratio (0.24) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.38 |
ROIC/WACC2.02
WACC10.92%
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.
With a Current ratio value of 1.35, MSFT perfoms like the industry average, outperforming 43.16% of the companies in the same industry.
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.
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 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.
MSFT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.67% yearly.
EPS Next Y15.86%
EPS Next 2Y16.45%
EPS Next 3Y17.21%
EPS Next 5Y15.23%
Revenue Next Year15.46%
Revenue Next 2Y14.93%
Revenue Next 3Y15.01%
Revenue Next 5Y12.67%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
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
The Price/Earnings ratio is 39.85, which means the current valuation is very expensive for MSFT.
Compared to the rest of the industry, the Price/Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 61.75% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of MSFT to the average of the S&P500 Index (27.08), we can say MSFT is valued slightly more expensively.
Based on the Price/Forward Earnings ratio of 34.40, 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 61.40% of the companies listed in the same industry.
MSFT is valuated rather expensively when we compare the Price/Forward Earnings ratio to 23.09, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 39.85 | ||
| Fwd PE | 34.4 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than the industry average as 78.60% of the companies are valued more expensively.
MSFT's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 56.42 | ||
| EV/EBITDA | 23.86 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of MSFT may justify a higher PE ratio.
A more expensive valuation may be justified as MSFT's earnings are expected to grow with 17.21% in the coming years.
PEG (NY)2.51
PEG (5Y)2.11
EPS Next 2Y16.45%
EPS Next 3Y17.21%
5. Dividend
5.1 Amount
With a yearly dividend of 0.70%, 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 34.33. MSFT pays more dividend than 91.23% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.30, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.7% |
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 their dividend for at least 10 years, which is a reliable track record.
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.
The dividend of MSFT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP23.65%
EPS Next 2Y16.45%
EPS Next 3Y17.21%
NASDAQ:MSFT (10/28/2025, 10:46:08 AM)
543.58
+12.06 (+2.27%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.31%
Inst Owner Change-1.57%
Ins Owners0.03%
Ins Owner Change0.02%
Market Cap4040.52B
Revenue(TTM)281.72B
Net Income(TTM)101.83B
Analysts85.71
Price Target618.12 (13.71%)
Short Float %0.7%
Short Ratio2.66
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.7% |
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)0.29%
PT rev (3m)14.52%
EPS NQ rev (1m)-0.03%
EPS NQ rev (3m)2.86%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)2.66%
Revenue NQ rev (1m)-0.19%
Revenue NQ rev (3m)1.69%
Revenue NY rev (1m)-0.05%
Revenue NY rev (3m)1.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 39.85 | ||
| Fwd PE | 34.4 | ||
| P/S | 14.34 | ||
| P/FCF | 56.42 | ||
| P/OCF | 29.67 | ||
| P/B | 11.76 | ||
| P/tB | 20.07 | ||
| EV/EBITDA | 23.86 |
EPS(TTM)13.64
EY2.51%
EPS(NY)15.8
Fwd EY2.91%
FCF(TTM)9.63
FCFY1.77%
OCF(TTM)18.32
OCFY3.37%
SpS37.9
BVpS46.21
TBVpS27.09
PEG (NY)2.51
PEG (5Y)2.11
Graham Number119.09
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%
ROICexgc growth 3Y-18.02%
ROICexgc 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 | 10.38 |
F-Score5
WACC10.92%
ROIC/WACC2.02
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 Y15.86%
EPS Next 2Y16.45%
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 Year15.46%
Revenue Next 2Y14.93%
Revenue Next 3Y15.01%
Revenue Next 5Y12.67%
EBIT growth 1Y17.45%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year51.87%
EBIT Next 3Y27.27%
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%
MICROSOFT CORP / MSFT FAQ
Can you provide the ChartMill fundamental rating for MICROSOFT CORP?
ChartMill assigns a fundamental rating of 7 / 10 to MSFT.
What is the valuation status for MSFT stock?
ChartMill assigns a valuation rating of 3 / 10 to MICROSOFT CORP (MSFT). This can be considered as Overvalued.
Can you provide the profitability details for MICROSOFT CORP?
MICROSOFT CORP (MSFT) has a profitability rating of 8 / 10.
What are the PE and PB ratios of MICROSOFT CORP (MSFT) stock?
The Price/Earnings (PE) ratio for MICROSOFT CORP (MSFT) is 39.85 and the Price/Book (PB) ratio is 11.76.
What is the earnings growth outlook for MICROSOFT CORP?
The Earnings per Share (EPS) of MICROSOFT CORP (MSFT) is expected to grow by 15.86% in the next year.