423.37 USD
-6.92 (-1.61%)
At close: Feb 2, 2026
423 USD
-0.37 (-0.09%)
After Hours: 2/2/2026, 4:07:06 PM
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 scores excellent points on both the profitability and health parts. This is a solid base for a good stock. MSFT is not priced too expensively while it is growing strongly. Keep and eye on this one! MSFT also has an excellent dividend rating. These ratings could make MSFT a good candidate for dividend and growth and quality investing.
1. Profitability
1.1 Basic Checks
- In the past year MSFT was profitable.
- In the past year MSFT had a positive cash flow from operations.
- Each year in the past 5 years MSFT has been profitable.
- Each year in the past 5 years MSFT had a positive operating cash flow.
1.2 Ratios
- MSFT has a Return On Assets of 17.93%. This is amongst the best in the industry. MSFT outperforms 93.88% of its industry peers.
- With an excellent Return On Equity value of 30.51%, MSFT belongs to the best of the industry, outperforming 92.45% of the companies in the same industry.
- MSFT has a better Return On Invested Capital (21.86%) than 94.60% 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 10.73%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.93% | ||
| ROE | 30.51% | ||
| ROIC | 21.86% |
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 (39.04%) than 92.81% of its industry peers.
- MSFT's Profit Margin has improved in the last couple of years.
- MSFT has a Operating Margin of 46.67%. This is amongst the best in the industry. MSFT outperforms 96.76% of its industry peers.
- MSFT's Operating Margin has improved in the last couple of years.
- With a Gross Margin value of 68.59%, MSFT perfoms like the industry average, outperforming 50.36% 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 | 46.67% | ||
| PM (TTM) | 39.04% | ||
| GM | 68.59% |
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.
- MSFT has less shares outstanding than it did 5 years ago.
- Compared to 1 year ago, MSFT has an improved debt to assets ratio.
2.2 Solvency
- MSFT has an Altman-Z score of 8.84. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
- MSFT's Altman-Z score of 8.84 is amongst the best of the industry. MSFT outperforms 89.57% of its industry peers.
- MSFT has a debt to FCF ratio of 1.30. This is a very positive value and a sign of high solvency as it would only need 1.30 years to pay back of all of its debts.
- MSFT has a better Debt to FCF ratio (1.30) than 72.30% of its industry peers.
- MSFT has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
- With a Debt to Equity ratio value of 0.23, MSFT perfoms like the industry average, outperforming 43.17% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.3 | ||
| Altman-Z | 8.84 |
ROIC/WACC1.98
WACC11.03%
2.3 Liquidity
- MSFT has a Current 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's Current ratio of 1.39 is in line compared to the rest of the industry. MSFT outperforms 43.17% of its industry peers.
- A Quick Ratio of 1.38 indicates that MSFT should not have too much problems paying its short term obligations.
- With a Quick ratio value of 1.38, MSFT perfoms like the industry average, outperforming 42.81% 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 Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.39 | ||
| Quick Ratio | 1.38 |
3. Growth
3.1 Past
- MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 23.83%, which is quite impressive.
- 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 16.67%.
- The Revenue has been growing by 14.52% on average over the past years. This is quite good.
EPS 1Y (TTM)23.83%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%28.17%
Revenue 1Y (TTM)16.67%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%16.72%
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.
- MSFT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.04% yearly.
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
- 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 27.53, 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 61.51% of the companies listed in the same industry.
- MSFT is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
- With a Price/Forward Earnings ratio of 22.12, MSFT is valued on the expensive side.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 65.47% of the companies listed in the same industry.
- MSFT is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.57, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.53 | ||
| Fwd PE | 22.12 |
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 78.06% of the companies listed 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 | 40.65 | ||
| EV/EBITDA | 17.48 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct 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 18.31% in the coming years.
PEG (NY)1.21
PEG (5Y)1.46
EPS Next 2Y18.47%
EPS Next 3Y18.31%
5. Dividend
5.1 Amount
- MSFT has a yearly dividend return of 0.85%, which is pretty low.
- MSFT's Dividend Yield is rather good when compared to the industry average which is at 0.56. MSFT pays more dividend than 90.65% of the companies in the same industry.
- With a Dividend Yield of 0.85, MSFT pays less dividend than the S&P500 average, which is at 1.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.85% |
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
- 21.19% 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.
DP21.19%
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.