MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
509.9 USD
+8.89 (+1.77%)
509.93 USD
+0.03 (+0.01%)
MSFT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 280 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 is valied quite expensively at the moment, while it does show a decent growth rate. MSFT also has an excellent dividend rating. These ratings could make MSFT a good candidate for dividend 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.
In the past 5 years MSFT has always been profitable.
Each year in the past 5 years MSFT had a positive operating cash flow.
1.2 Ratios
The Return On Assets of MSFT (16.45%) is better than 92.14% of its industry peers.
MSFT has a better Return On Equity (29.65%) than 92.14% 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 94.29% 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 11.95%.
| 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
Looking at the Profit Margin, with a value of 36.15%, MSFT belongs to the top of the industry, outperforming 92.86% of the companies in the same industry.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT has a better Operating Margin (45.62%) than 96.79% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 68.82%, MSFT perfoms like the industry average, outperforming 50.36% of the companies in the same 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
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.
MSFT has less shares outstanding than it did 5 years ago.
MSFT has a better debt/assets ratio than last year.
2.2 Solvency
MSFT has an Altman-Z score of 10.03. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
MSFT has a better Altman-Z score (10.03) than 85.36% of its industry peers.
MSFT has a debt to FCF ratio of 1.25. This is a very positive value and a sign of high solvency as it would only need 1.25 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.25, MSFT is doing good in the industry, outperforming 73.21% 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 comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.03 |
ROIC/WACC1.98
WACC11.14%
2.3 Liquidity
A Current Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
With a Current ratio value of 1.35, MSFT perfoms like the industry average, outperforming 43.57% of the companies in the same industry.
MSFT has a Quick 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.
Looking at the Quick ratio, with a value of 1.35, MSFT is in line with its industry, outperforming 43.93% 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 | 1.35 | ||
| 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.
The Revenue has grown by 14.93% in the past year. This is quite good.
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
MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.23% yearly.
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 3Y17.54%
EPS Next 5Y15.23%
Revenue Next Year15.52%
Revenue Next 2Y14.96%
Revenue Next 3Y14.93%
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
The Price/Earnings ratio is 37.38, 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 61.43% of the companies listed in the same industry.
MSFT is valuated rather expensively when we compare the Price/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 32.24, MSFT can be considered very expensive at the moment.
61.43% of the companies in the same industry are more expensive than MSFT, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.73, MSFT is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.38 | ||
| Fwd PE | 32.24 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than 77.14% of the companies in the same industry.
MSFT's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.93 | ||
| EV/EBITDA | 22.87 |
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.
A more expensive valuation may be justified as MSFT's earnings are expected to grow with 17.54% in the coming years.
PEG (NY)2.34
PEG (5Y)1.98
EPS Next 2Y16.49%
EPS Next 3Y17.54%
5. Dividend
5.1 Amount
With a yearly dividend of 0.66%, MSFT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 57.96, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.43% of the companies listed in the same industry.
With a Dividend Yield of 0.66, MSFT pays less dividend than the S&P500 average, which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
5.2 History
On average, the dividend of MSFT grows each year by 10.24%, which is quite nice.
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
23.65% 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 2Y16.49%
EPS Next 3Y17.54%
509.9
+8.89 (+1.77%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.49%
Inst Owner Change12.46%
Ins Owners0.03%
Ins Owner Change0%
Market Cap3790.17B
Analysts85.71
Price Target616.37 (20.88%)
Short Float %0.76%
Short Ratio2.7
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)1.93%
PT rev (3m)19.36%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)3.37%
EPS NY rev (1m)2.74%
EPS NY rev (3m)2.81%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.31%
Revenue NY rev (1m)1.77%
Revenue NY rev (3m)1.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.38 | ||
| Fwd PE | 32.24 | ||
| P/S | 13.45 | ||
| P/FCF | 52.93 | ||
| P/OCF | 27.84 | ||
| P/B | 11.03 | ||
| P/tB | 18.82 | ||
| EV/EBITDA | 22.87 |
EPS(TTM)13.64
EY2.68%
EPS(NY)15.81
Fwd EY3.1%
FCF(TTM)9.63
FCFY1.89%
OCF(TTM)18.32
OCFY3.59%
SpS37.9
BVpS46.21
TBVpS27.09
PEG (NY)2.34
PEG (5Y)1.98
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 | 10.03 |
F-Score5
WACC11.14%
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 3Y17.54%
EPS Next 5Y15.23%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
Revenue Next Year15.52%
Revenue Next 2Y14.96%
Revenue Next 3Y14.93%
Revenue Next 5Y11.89%
EBIT growth 1Y17.45%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year49.13%
EBIT Next 3Y27.09%
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%