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MICROSOFT CORP (MSFT) Stock Fundamental Analysis

NASDAQ:MSFT - Nasdaq - US5949181045 - Common Stock - Currency: USD

478.87  +6.25 (+1.32%)

After market: 478.17 -0.7 (-0.15%)

Fundamental Rating

7

MSFT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 284 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. This makes MSFT very considerable for dividend and quality investing!


Dividend Valuation Growth Profitability Health

8

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.
Each year in the past 5 years MSFT had a positive operating cash flow.
MSFT Yearly Net Income VS EBIT VS OCF VS FCFMSFT Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B

1.2 Ratios

The Return On Assets of MSFT (17.18%) is better than 92.61% of its industry peers.
With an excellent Return On Equity value of 30.02%, MSFT belongs to the best of the industry, outperforming 90.85% of the companies in the same industry.
MSFT has a better Return On Invested Capital (22.17%) than 95.07% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 12.30%.
Industry RankSector Rank
ROA 17.18%
ROE 30.02%
ROIC 22.17%
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
MSFT Yearly ROA, ROE, ROICMSFT Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10 20 30 40

1.3 Margins

With an excellent Profit Margin value of 35.79%, MSFT belongs to the best of the industry, outperforming 96.13% of the companies in the same industry.
MSFT's Profit Margin has improved in the last couple of years.
The Operating Margin of MSFT (45.23%) is better than 98.94% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
MSFT has a Gross Margin (69.07%) which is comparable to the rest of the industry.
MSFT's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 45.23%
PM (TTM) 35.79%
GM 69.07%
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
MSFT Yearly Profit, Operating, Gross MarginsMSFT Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60

8

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.
MSFT Yearly Shares OutstandingMSFT Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B
MSFT Yearly Total Debt VS Total AssetsMSFT Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100B 200B 300B 400B 500B

2.2 Solvency

MSFT has an Altman-Z score of 10.59. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 10.59, MSFT belongs to the top of the industry, outperforming 86.62% of the companies in the same industry.
The Debt to FCF ratio of MSFT is 1.18, which is an excellent value as it means it would take MSFT, only 1.18 years of fcf income to pay off all of its debts.
MSFT has a Debt to FCF ratio of 1.18. This is in the better half of the industry: MSFT outperforms 73.94% 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 45.42% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.24
Debt/FCF 1.18
Altman-Z 10.59
ROIC/WACC2
WACC11.09%
MSFT Yearly LT Debt VS Equity VS FCFMSFT Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B 200B 250B

2.3 Liquidity

MSFT has a Current Ratio of 1.37. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
MSFT has a Current ratio of 1.37. This is comparable to the rest of the industry: MSFT outperforms 43.66% of its industry peers.
A Quick Ratio of 1.36 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio (1.36) which is comparable to the rest of the 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 RankSector Rank
Current Ratio 1.37
Quick Ratio 1.36
MSFT Yearly Current Assets VS Current LiabilitesMSFT Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50B 100B 150B

6

3. Growth

3.1 Past

MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.03%, 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 19.98% yearly.
MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.13%.
MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.26% yearly.
EPS 1Y (TTM)12.03%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%17.69%
Revenue 1Y (TTM)14.13%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%13.27%

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 15.57% 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 13.26% on average per year.
EPS Next Y15.38%
EPS Next 2Y14.13%
EPS Next 3Y15.04%
EPS Next 5Y15.57%
Revenue Next Year13.95%
Revenue Next 2Y13.71%
Revenue Next 3Y13.91%
Revenue Next 5Y13.26%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
MSFT Yearly Revenue VS EstimatesMSFT Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 200B 400B 600B
MSFT Yearly EPS VS EstimatesMSFT Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 10 20 30

4

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 37.01, which means the current valuation is very expensive for MSFT.
MSFT's Price/Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 66.90% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.60. MSFT is valued slightly more expensive when compared to this.
A Price/Forward Earnings ratio of 31.13 indicates a quite expensive valuation of MSFT.
Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than 63.03% of the companies in the same industry.
MSFT's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 22.39.
Industry RankSector Rank
PE 37.01
Fwd PE 31.13
MSFT Price Earnings VS Forward Price EarningsMSFT Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60

4.2 Price Multiples

MSFT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 79.58% of the companies in the same industry.
MSFT's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 60.92% of the companies in the same industry.
Industry RankSector Rank
P/FCF 51.31
EV/EBITDA 22.87
MSFT Per share dataMSFT EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 10 20 30 40

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.
MSFT has an outstanding profitability rating, which may justify a higher PE ratio.
MSFT's earnings are expected to grow with 15.04% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.41
PEG (5Y)1.85
EPS Next 2Y14.13%
EPS Next 3Y15.04%

7

5. Dividend

5.1 Amount

With a yearly dividend of 0.71%, 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 16.43. MSFT pays more dividend than 92.25% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.39, MSFT's dividend is way lower than the S&P500 average.
Industry RankSector Rank
Dividend Yield 0.71%

5.2 History

On average, the dividend of MSFT grows each year by 10.19%, which is quite nice.
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)10.19%
Div Incr Years20
Div Non Decr Years20
MSFT Yearly Dividends per shareMSFT Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1 2 3

5.3 Sustainability

MSFT pays out 24.30% 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.
DP24.3%
EPS Next 2Y14.13%
EPS Next 3Y15.04%
MSFT Yearly Income VS Free CF VS DividendMSFT Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B
MSFT Dividend Payout.MSFT Dividend Payout, showing the Payout Ratio.MSFT Dividend Payout.PayoutRetained Earnings

MICROSOFT CORP

NASDAQ:MSFT (6/12/2025, 6:32:25 PM)

After market: 478.17 -0.7 (-0.15%)

478.87

+6.25 (+1.32%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)04-30 2025-04-30/amc
Earnings (Next)07-28 2025-07-28/amc
Inst Owners74.18%
Inst Owner Change1.48%
Ins Owners0.03%
Ins Owner Change-0.03%
Market Cap3559.22B
Analysts84.64
Price Target516.4 (7.84%)
Short Float %0.77%
Short Ratio2.34
Dividend
Industry RankSector Rank
Dividend Yield 0.71%
Yearly Dividend2.93
Dividend Growth(5Y)10.19%
DP24.3%
Div Incr Years20
Div Non Decr Years20
Ex-Date05-15 2025-05-15 (0.83)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.56%
Min EPS beat(2)1.79%
Max EPS beat(2)5.34%
EPS beat(4)3
Avg EPS beat(4)2.53%
Min EPS beat(4)-1.43%
Max EPS beat(4)5.34%
EPS beat(8)7
Avg EPS beat(8)3.7%
EPS beat(12)9
Avg EPS beat(12)2.65%
EPS beat(16)12
Avg EPS beat(16)3.43%
Revenue beat(2)1
Avg Revenue beat(2)-0.18%
Min Revenue beat(2)-0.75%
Max Revenue beat(2)0.4%
Revenue beat(4)1
Avg Revenue beat(4)-0.53%
Min Revenue beat(4)-1.44%
Max Revenue beat(4)0.4%
Revenue beat(8)2
Avg Revenue beat(8)-0.25%
Revenue beat(12)3
Avg Revenue beat(12)-0.56%
Revenue beat(16)5
Avg Revenue beat(16)-0.31%
PT rev (1m)1.21%
PT rev (3m)0.69%
EPS NQ rev (1m)-0.39%
EPS NQ rev (3m)1.17%
EPS NY rev (1m)1.97%
EPS NY rev (3m)1.95%
Revenue NQ rev (1m)0.06%
Revenue NQ rev (3m)1.57%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.8%
Valuation
Industry RankSector Rank
PE 37.01
Fwd PE 31.13
P/S 13.18
P/FCF 51.31
P/OCF 27.23
P/B 11.06
P/tB 19.93
EV/EBITDA 22.87
EPS(TTM)12.94
EY2.7%
EPS(NY)15.38
Fwd EY3.21%
FCF(TTM)9.33
FCFY1.95%
OCF(TTM)17.59
OCFY3.67%
SpS36.33
BVpS43.31
TBVpS24.03
PEG (NY)2.41
PEG (5Y)1.85
Profitability
Industry RankSector Rank
ROA 17.18%
ROE 30.02%
ROCE 27.24%
ROIC 22.17%
ROICexc 26.95%
ROICexgc 44.08%
OM 45.23%
PM (TTM) 35.79%
GM 69.07%
FCFM 25.69%
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
ROICexc(3y)35.43%
ROICexc(5y)40.49%
ROICexgc(3y)63.99%
ROICexgc(5y)78.75%
ROCE(3y)29.44%
ROCE(5y)28%
ROICexcg growth 3Y-19.4%
ROICexcg growth 5Y-12.98%
ROICexc growth 3Y-17.33%
ROICexc growth 5Y-7.77%
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
F-Score5
Asset Turnover0.48
Health
Industry RankSector Rank
Debt/Equity 0.24
Debt/FCF 1.18
Debt/EBITDA 0.5
Cap/Depr 209.15%
Cap/Sales 22.72%
Interest Coverage 250
Cash Conversion 86.3%
Profit Quality 71.78%
Current Ratio 1.37
Quick Ratio 1.36
Altman-Z 10.59
F-Score5
WACC11.09%
ROIC/WACC2
Cap/Depr(3y)189.18%
Cap/Depr(5y)172.93%
Cap/Sales(3y)14.49%
Cap/Sales(5y)13.3%
Profit Quality(3y)85.27%
Profit Quality(5y)89.91%
High Growth Momentum
Growth
EPS 1Y (TTM)12.03%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%17.69%
EPS Next Y15.38%
EPS Next 2Y14.13%
EPS Next 3Y15.04%
EPS Next 5Y15.57%
Revenue 1Y (TTM)14.13%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%13.27%
Revenue Next Year13.95%
Revenue Next 2Y13.71%
Revenue Next 3Y13.91%
Revenue Next 5Y13.26%
EBIT growth 1Y15.48%
EBIT growth 3Y16.11%
EBIT growth 5Y20.56%
EBIT Next Year44.54%
EBIT Next 3Y24.22%
EBIT Next 5Y20.76%
FCF growth 1Y20.83%
FCF growth 3Y9.69%
FCF growth 5Y14.13%
OCF growth 1Y56.65%
OCF growth 3Y15.6%
OCF growth 5Y17.83%