MICROSOFT CORP (MSFT)
US5949181045 - Common Stock
Overall MSFT gets a fundamental rating of 7 out of 10. We evaluated MSFT against 277 industry peers in the Software industry. MSFT gets an excellent profitability rating and is at the same time showing great financial health properties. MSFT is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! Finally 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
MSFT had positive earnings in the past year.
MSFT had a positive operating cash flow in the past year.
Each year in the past 5 years MSFT has been profitable.
In the past 5 years MSFT always reported a positive cash flow from operatings.
1.2 Ratios
MSFT has a Return On Assets of 17.80%. This is amongst the best in the industry. MSFT outperforms 96.72% of its industry peers.
With an excellent Return On Equity value of 34.04%, MSFT belongs to the best of the industry, outperforming 95.26% of the companies in the same industry.
With an excellent Return On Invested Capital value of 22.99%, MSFT belongs to the best of the industry, outperforming 97.81% 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 10.36%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.8% | ||
| ROE | 34.04% | ||
| ROIC | 22.99% |
ROA(3y)18.62%
ROA(5y)16.85%
ROE(3y)40.64%
ROE(5y)39.54%
ROIC(3y)24.79%
ROIC(5y)22.08%
1.3 Margins
MSFT has a better Profit Margin (36.43%) than 96.72% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
With an excellent Operating Margin value of 44.70%, MSFT belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
In the last couple of years the Operating Margin of MSFT has grown nicely.
The Gross Margin of MSFT (69.89%) 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 | 44.7% | ||
| PM (TTM) | 36.43% | ||
| GM | 69.89% |
OM growth 3Y4.56%
OM growth 5Y5.91%
PM growth 3Y3.32%
PM growth 5Y17.86%
GM growth 3Y0.56%
GM growth 5Y1.1%
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.
The number of shares outstanding for MSFT has been reduced compared to 1 year ago.
Compared to 5 years ago, MSFT has less shares outstanding
Compared to 1 year ago, MSFT has an improved debt to assets ratio.
2.2 Solvency
MSFT has an Altman-Z score of 9.64. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
MSFT's Altman-Z score of 9.64 is amongst the best of the industry. MSFT outperforms 85.77% 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.
MSFT has a better Debt to FCF ratio (1.25) than 74.09% of its industry peers.
A Debt/Equity ratio of 0.33 indicates that MSFT is not too dependend on debt financing.
MSFT has a Debt to Equity ratio (0.33) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.64 |
ROIC/WACC2.3
WACC9.98%
2.3 Liquidity
MSFT has a Current Ratio of 1.24. 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 1.24, MSFT is not doing good in the industry: 66.06% of the companies in the same industry are doing better.
MSFT has a Quick Ratio of 1.23. 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 Quick ratio of 1.23. This is in the lower half of the industry: MSFT underperforms 64.96% 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 | 1.24 | ||
| Quick Ratio | 1.23 |
3. Growth
3.1 Past
MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 23.53%, which is quite impressive.
MSFT shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.38% yearly.
Looking at the last year, MSFT shows a quite strong growth in Revenue. The Revenue has grown by 13.97% in the last year.
The Revenue has been growing by 13.94% on average over the past years. This is quite good.
EPS 1Y (TTM)23.53%
EPS 3Y19.49%
EPS 5Y20.38%
EPS growth Q2Q20%
Revenue 1Y (TTM)13.97%
Revenue growth 3Y14.01%
Revenue growth 5Y13.94%
Revenue growth Q2Q17.03%
3.2 Future
The Earnings Per Share is expected to grow by 16.40% on average over the next years. This is quite good.
MSFT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.25% yearly.
EPS Next Y21.09%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
EPS Next 5Y16.4%
Revenue Next Year15.56%
Revenue Next 2Y14.94%
Revenue Next 3Y14.74%
Revenue Next 5Y14.25%
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
A Price/Earnings ratio of 35.59 indicates a quite expensive valuation of MSFT.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than the industry average as 70.44% of the companies are valued more expensively.
MSFT's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 28.11.
A Price/Forward Earnings ratio of 30.15 indicates a quite expensive valuation of MSFT.
Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than the industry average as 70.07% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.39, MSFT is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.59 | ||
| Fwd PE | 30.15 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued cheaper than 83.21% 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 64.23% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 43.29 | ||
| EV/EBITDA | 23.66 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
MSFT has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as MSFT's earnings are expected to grow with 17.93% in the coming years.
PEG (NY)1.69
PEG (5Y)1.75
EPS Next 2Y17.89%
EPS Next 3Y17.93%
5. Dividend
5.1 Amount
With a yearly dividend of 0.75%, 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 11.43. MSFT pays more dividend than 91.97% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.75% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.00%!
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%
Div Incr Years18
Div Non Decr Years18
5.3 Sustainability
24.66% 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.
DP24.66%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
MICROSOFT CORP
NASDAQ:MSFT (5/8/2024, 12:07:08 PM)
411.04
+1.7 (+0.42%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners71.98%
Inst Owner Change-0.38%
Ins Owners5.99%
Ins Owner Change-0.04%
Market Cap3054.98B
Analysts86.67
Price Target477.05 (16.06%)
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.75% |
Dividend Growth(5Y)10%
DP24.66%
Div Incr Years18
Div Non Decr Years18
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.65%
Min EPS beat(2)2.03%
Max EPS beat(2)3.27%
EPS beat(4)4
Avg EPS beat(4)4.8%
Min EPS beat(4)2.03%
Max EPS beat(4)10.49%
EPS beat(8)6
Avg EPS beat(8)2.67%
EPS beat(12)9
Avg EPS beat(12)3.7%
EPS beat(16)13
Avg EPS beat(16)5.96%
Revenue beat(2)0
Avg Revenue beat(2)-0.36%
Min Revenue beat(2)-0.51%
Max Revenue beat(2)-0.2%
Revenue beat(4)1
Avg Revenue beat(4)0.05%
Min Revenue beat(4)-0.69%
Max Revenue beat(4)1.63%
Revenue beat(8)2
Avg Revenue beat(8)-0.56%
Revenue beat(12)4
Avg Revenue beat(12)-0.24%
Revenue beat(16)7
Avg Revenue beat(16)0.38%
PT rev (1m)1.86%
PT rev (3m)12.29%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)2.4%
EPS NY rev (1m)-0.12%
EPS NY rev (3m)3.33%
Revenue NQ rev (1m)-0.01%
Revenue NQ rev (3m)-0.33%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.31%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.59 | ||
| Fwd PE | 30.15 | ||
| P/S | 12.91 | ||
| P/FCF | 43.29 | ||
| P/OCF | 27.74 | ||
| P/B | 12.07 | ||
| P/tB | 29.05 | ||
| EV/EBITDA | 23.66 |
EPS(TTM)11.55
EY2.81%
EPS(NY)13.63
Fwd EY3.32%
FCF(TTM)9.5
FCFY2.31%
OCF(TTM)14.82
OCFY3.6%
SpS31.83
BVpS34.06
TBVpS14.15
PEG (NY)1.69
PEG (5Y)1.75
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.8% | ||
| ROE | 34.04% | ||
| ROCE | 28.92% | ||
| ROIC | 22.99% | ||
| ROICexc | 28.99% | ||
| ROICexgc | 56.1% | ||
| OM | 44.7% | ||
| PM (TTM) | 36.43% | ||
| GM | 69.89% | ||
| FCFM | 29.83% |
ROA(3y)18.62%
ROA(5y)16.85%
ROE(3y)40.64%
ROE(5y)39.54%
ROIC(3y)24.79%
ROIC(5y)22.08%
ROICexc(3y)43.96%
ROICexc(5y)44.65%
ROICexgc(3y)82.27%
ROICexgc(5y)92%
ROCE(3y)29.52%
ROCE(5y)26.3%
ROICexcg growth 3Y-15.78%
ROICexcg growth 5Y-13.2%
ROICexc growth 3Y-7.29%
ROICexc growth 5Y-2.79%
OM growth 3Y4.56%
OM growth 5Y5.91%
PM growth 3Y3.32%
PM growth 5Y17.86%
GM growth 3Y0.56%
GM growth 5Y1.1%
F-Score6
Asset Turnover0.49
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 1.25 | ||
| Debt/EBITDA | 0.67 | ||
| Cap/Depr | 199.92% | ||
| Cap/Sales | 16.72% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.72% | ||
| Profit Quality | 81.89% | ||
| Current Ratio | 1.24 | ||
| Quick Ratio | 1.23 | ||
| Altman-Z | 9.64 |
F-Score6
WACC9.98%
ROIC/WACC2.3
Cap/Depr(3y)181.48%
Cap/Depr(5y)156.86%
Cap/Sales(3y)12.53%
Cap/Sales(5y)11.89%
Profit Quality(3y)87.78%
Profit Quality(5y)92.6%
Growth
EPS 1Y (TTM)23.53%
EPS 3Y19.49%
EPS 5Y20.38%
EPS growth Q2Q20%
EPS Next Y21.09%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
EPS Next 5Y16.4%
Revenue 1Y (TTM)13.97%
Revenue growth 3Y14.01%
Revenue growth 5Y13.94%
Revenue growth Q2Q17.03%
Revenue Next Year15.56%
Revenue Next 2Y14.94%
Revenue Next 3Y14.74%
Revenue Next 5Y14.25%
EBIT growth 1Y23.02%
EBIT growth 3Y19.2%
EBIT growth 5Y20.67%
EBIT Next Year45.68%
EBIT Next 3Y24.68%
EBIT Next 5Y20.66%
FCF growth 1Y10.88%
FCF growth 3Y9.55%
FCF growth 5Y13.02%
OCF growth 1Y26.41%
OCF growth 3Y13.01%
OCF growth 5Y14.82%