MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
496.31 USD
-0.79 (-0.16%)
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 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 is not valued too expensively and it also shows a decent growth rate. Finally MSFT also has an excellent dividend rating. These ratings would make MSFT suitable for dividend and quality investing!
1. Profitability
1.1 Basic Checks
MSFT had positive earnings in the past year.
In the past year MSFT had a positive cash flow from operations.
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's Return On Assets of 16.49% is amongst the best of the industry. MSFT outperforms 91.20% of its industry peers.
Looking at the Return On Equity, with a value of 28.90%, MSFT belongs to the top of the industry, outperforming 91.20% of the companies in the same industry.
MSFT's Return On Invested Capital of 22.25% is amongst the best of the industry. MSFT outperforms 94.72% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MSFT is significantly above the industry average of 11.85%.
| 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
Looking at the Profit Margin, with a value of 35.71%, MSFT belongs to the top of the industry, outperforming 92.25% of the companies in the same industry.
MSFT's Profit Margin has improved in the last couple of years.
MSFT's Operating Margin of 46.27% is amongst the best of the industry. MSFT outperforms 97.18% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
Looking at the Gross Margin, with a value of 68.76%, MSFT is in line with its industry, outperforming 50.35% 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 | 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MSFT is creating value.
Compared to 1 year ago, MSFT has about the same amount of shares outstanding.
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 9.94. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 9.94, MSFT belongs to the best of the industry, outperforming 86.27% 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.
Looking at the Debt to FCF ratio, with a value of 1.25, MSFT is in the better half of the industry, outperforming 73.24% 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.
Looking at the Debt to Equity ratio, with a value of 0.24, MSFT is in line with its industry, outperforming 45.42% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.94 |
ROIC/WACC2.02
WACC11%
2.3 Liquidity
A Current Ratio of 1.40 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT's Current ratio of 1.40 is in line compared to the rest of the industry. MSFT outperforms 45.07% of its industry peers.
A Quick Ratio of 1.39 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT's Quick ratio of 1.39 is in line compared to the rest of the industry. MSFT outperforms 45.42% of its industry peers.
The current and quick ratio evaluation for MSFT is rather negative, while it does have 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 16.01% over the past year.
The Earnings Per Share has been growing by 18.86% on average over the past years. This is quite good.
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)16.01%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%12.73%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
3.2 Future
The Earnings Per Share is expected to grow by 18.83% on average over the next years. This is quite good.
The Revenue is expected to grow by 14.31% on average over the next years. This is quite good.
EPS Next Y16.96%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
EPS Next 5Y18.83%
Revenue Next Year16.4%
Revenue Next 2Y15.53%
Revenue Next 3Y15.9%
Revenue Next 5Y14.31%
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.
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
With a Price/Earnings ratio of 35.30, MSFT can be considered very expensive at the moment.
60.92% of the companies in the same industry are more expensive than MSFT, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of MSFT to the average of the S&P500 Index (25.67), we can say MSFT is valued slightly more expensively.
A Price/Forward Earnings ratio of 26.27 indicates a quite expensive valuation of MSFT.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 65.14% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 31.86. MSFT is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.3 | ||
| Fwd PE | 26.27 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than 79.58% of the companies in the same industry.
61.97% of the companies in the same industry are more expensive than MSFT, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 47.29 | ||
| EV/EBITDA | 20.58 |
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 18.50% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.08
PEG (5Y)1.87
EPS Next 2Y17.68%
EPS Next 3Y18.5%
5. Dividend
5.1 Amount
With a yearly dividend of 0.72%, MSFT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 36.32, MSFT pays a better dividend. On top of this MSFT pays more dividend than 90.14% of the companies listed 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 | 0.72% |
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
MSFT pays out 23.52% of its income as dividend. This is a sustainable payout ratio.
The dividend of MSFT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP23.52%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
NASDAQ:MSFT (11/7/2025, 9:40:09 AM)
496.31
-0.79 (-0.16%)
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 Cap3.69T
Revenue(TTM)293.81B
Net Income(TTM)104.91B
Analysts86.29
Price Target624.5 (25.83%)
Short Float %0.7%
Short Ratio2.66
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
Yearly Dividend3.24
Dividend Growth(5Y)10.24%
DP23.52%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.85%
Min EPS beat(2)-0.51%
Max EPS beat(2)6.2%
EPS beat(4)3
Avg EPS beat(4)3.2%
Min EPS beat(4)-0.51%
Max EPS beat(4)6.2%
EPS beat(8)6
Avg EPS beat(8)2.67%
EPS beat(12)9
Avg EPS beat(12)3.5%
EPS beat(16)11
Avg EPS beat(16)2.64%
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 | 35.3 | ||
| Fwd PE | 26.27 | ||
| P/S | 12.56 | ||
| P/FCF | 47.29 | ||
| P/OCF | 25.09 | ||
| P/B | 10.16 | ||
| P/tB | 16.59 | ||
| EV/EBITDA | 20.58 |
EPS(TTM)14.06
EY2.83%
EPS(NY)18.89
Fwd EY3.81%
FCF(TTM)10.5
FCFY2.11%
OCF(TTM)19.78
OCFY3.99%
SpS39.53
BVpS48.85
TBVpS29.91
PEG (NY)2.08
PEG (5Y)1.87
Graham Number124.31
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 | 9.94 |
F-Score6
WACC11%
ROIC/WACC2.02
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)16.01%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%12.73%
EPS Next Y16.96%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
EPS Next 5Y18.83%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
Revenue Next Year16.4%
Revenue Next 2Y15.53%
Revenue Next 3Y15.9%
Revenue Next 5Y14.31%
EBIT growth 1Y20.2%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year51.87%
EBIT Next 3Y28.86%
EBIT Next 5Y23.22%
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 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 are the PE and PB ratios of MICROSOFT CORP (MSFT) stock?
The Price/Earnings (PE) ratio for MICROSOFT CORP (MSFT) is 35.3 and the Price/Book (PB) ratio is 10.16.
What is the earnings growth outlook for MICROSOFT CORP?
The Earnings per Share (EPS) of MICROSOFT CORP (MSFT) is expected to grow by 16.96% in the next year.