MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
517.81 USD
-7.95 (-1.51%)
517.71 USD
-0.1 (-0.02%)
MSFT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 284 industry peers in the Software industry. MSFT gets an excellent profitability rating and is at the same time showing great financial health properties. MSFT has a decent growth rate and is not valued too expensively. 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.
MSFT had a positive operating cash flow in the past year.
Each year in the past 5 years MSFT has been profitable.
MSFT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
MSFT's Return On Assets of 16.49% is amongst the best of the industry. MSFT outperforms 91.58% of its industry peers.
MSFT's Return On Equity of 28.90% is amongst the best of the industry. MSFT outperforms 91.23% of its industry peers.
The Return On Invested Capital of MSFT (22.25%) is better than 94.74% 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 11.84%.
| 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
MSFT's Profit Margin of 35.71% 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 better Operating Margin (46.27%) than 97.19% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
MSFT has a Gross Margin (68.76%) 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 | 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.
MSFT has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for MSFT has been reduced compared to 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 10.28. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 10.28, MSFT belongs to the best of the industry, outperforming 85.61% of the companies in the same industry.
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.
MSFT's Debt to FCF ratio of 1.25 is fine compared to the rest of the industry. MSFT outperforms 73.33% of its industry peers.
A Debt/Equity ratio of 0.24 indicates that MSFT is not too dependend on debt financing.
MSFT's Debt to Equity ratio of 0.24 is in line compared to the rest of the industry. MSFT outperforms 45.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.28 |
ROIC/WACC2.03
WACC10.95%
2.3 Liquidity
A Current Ratio of 1.40 indicates that MSFT should not have too much problems paying its short term obligations.
The Current ratio of MSFT (1.40) is comparable to the rest of the industry.
A Quick Ratio of 1.39 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio of 1.39. This is comparable to the rest of the industry: MSFT outperforms 45.61% of 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 | 1.4 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 19.39% over the past year.
Measured over the past years, MSFT shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.86% on average per year.
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 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 12.67% on average per year.
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
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 35.79.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 62.81% 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 26.11.
The Price/Forward Earnings ratio is 28.00, which means the current valuation is very expensive for MSFT.
MSFT's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 64.21% of the companies in the same industry.
MSFT is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.55, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.79 | ||
| Fwd PE | 28 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than 79.30% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MSFT is valued a bit cheaper than 61.40% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 49.33 | ||
| EV/EBITDA | 21.46 |
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)2.26
PEG (5Y)1.9
EPS Next 2Y16.45%
EPS Next 3Y17.21%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.69%, which is pretty low.
MSFT's Dividend Yield is rather good when compared to the industry average which is at 36.27. MSFT pays more dividend than 90.18% of the companies in the same industry.
With a Dividend Yield of 0.69, MSFT pays less dividend than the S&P500 average, which is at 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.69% |
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
MSFT pays out 23.52% of its income as dividend. This is a sustainable payout ratio.
MSFT's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP23.52%
EPS Next 2Y16.45%
EPS Next 3Y17.21%
517.81
-7.95 (-1.51%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.31%
Inst Owner Change-2.04%
Ins Owners0.03%
Ins Owner Change0.03%
Market Cap3848.97B
Revenue(TTM)293.81B
Net Income(TTM)104.91B
Analysts85.71
Price Target624.5 (20.6%)
Short Float %0.7%
Short Ratio2.66
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.69% |
Yearly Dividend3.24
Dividend Growth(5Y)10.24%
DP23.52%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.33%
Min EPS beat(2)6.2%
Max EPS beat(2)10.46%
EPS beat(4)4
Avg EPS beat(4)5.95%
Min EPS beat(4)1.79%
Max EPS beat(4)10.46%
EPS beat(8)7
Avg EPS beat(8)4.04%
EPS beat(12)10
Avg EPS beat(12)4.42%
EPS beat(16)12
Avg EPS beat(16)3.32%
Revenue beat(2)2
Avg Revenue beat(2)1.31%
Min Revenue beat(2)1.09%
Max Revenue beat(2)1.54%
Revenue beat(4)3
Avg Revenue beat(4)0.57%
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)5
Avg Revenue beat(12)-0.01%
Revenue beat(16)5
Avg Revenue beat(16)-0.36%
PT rev (1m)1.32%
PT rev (3m)15.7%
EPS NQ rev (1m)-0.01%
EPS NQ rev (3m)1.97%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)2.66%
Revenue NQ rev (1m)-0.05%
Revenue NQ rev (3m)2.11%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)1.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.79 | ||
| Fwd PE | 28 | ||
| P/S | 13.1 | ||
| P/FCF | 49.33 | ||
| P/OCF | 26.18 | ||
| P/B | 10.6 | ||
| P/tB | 17.31 | ||
| EV/EBITDA | 21.46 |
EPS(TTM)14.47
EY2.79%
EPS(NY)18.5
Fwd EY3.57%
FCF(TTM)10.5
FCFY2.03%
OCF(TTM)19.78
OCFY3.82%
SpS39.53
BVpS48.85
TBVpS29.91
PEG (NY)2.26
PEG (5Y)1.9
Graham Number126.11
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.49% | ||
| ROE | 28.9% | ||
| ROCE | 27.11% | ||
| ROIC | 22.25% | ||
| ROICexc | 27.94% | ||
| ROICexgc | 43.14% | ||
| OM | 46.27% | ||
| PM (TTM) | 35.71% | ||
| GM | 68.76% | ||
| FCFM | 26.55% |
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-Score6
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Debt/EBITDA | 0.49 | ||
| Cap/Depr | 173.29% | ||
| Cap/Sales | 23.49% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 83.66% | ||
| Profit Quality | 74.36% | ||
| Current Ratio | 1.4 | ||
| Quick Ratio | 1.39 | ||
| Altman-Z | 10.28 |
F-Score6
WACC10.95%
ROIC/WACC2.03
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)19.39%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%25.15%
EPS Next Y15.86%
EPS Next 2Y16.45%
EPS Next 3Y17.21%
EPS Next 5Y15.23%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
Revenue Next Year15.46%
Revenue Next 2Y14.93%
Revenue Next 3Y15.01%
Revenue Next 5Y12.67%
EBIT growth 1Y20.2%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year51.87%
EBIT Next 3Y27.27%
EBIT Next 5Y25.57%
FCF growth 1Y23.39%
FCF growth 3Y3.2%
FCF growth 5Y9.62%
OCF growth 1Y54.83%
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 35.79 and the Price/Book (PB) ratio is 10.6.
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.