MICROSOFT CORP (MSFT) Stock Fundamental Analysis
NASDAQ:MSFT - US5949181045 - Common Stock
506.69 USD
-2.95 (-0.58%)
504.43 USD
-2.26 (-0.45%)
Overall MSFT gets a fundamental rating of 7 out of 10. We evaluated MSFT against 280 industry peers in the Software industry. MSFT scores excellent points on both the profitability and health parts. This is a solid base for a good stock. While showing a medium growth rate, MSFT is valued expensive at the moment. Finally 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
MSFT had positive earnings in the past year.
In the past year MSFT had a positive cash flow from operations.
MSFT had positive earnings in each of the past 5 years.
MSFT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
MSFT's Return On Assets of 16.45% is amongst the best of the industry. MSFT outperforms 91.79% of its industry peers.
With an excellent Return On Equity value of 29.65%, MSFT belongs to the best of the industry, outperforming 91.79% of the companies in the same industry.
The Return On Invested Capital of MSFT (22.08%) is better than 94.29% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 12.00%.
| 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 92.50% of the companies in the same industry.
MSFT's Profit Margin has improved in the last couple of years.
MSFT's Operating Margin of 45.62% is amongst the best of the industry. MSFT outperforms 96.79% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
With a Gross Margin value of 68.82%, MSFT perfoms like the industry average, outperforming 50.36% of the companies in the same industry.
MSFT's Gross Margin has been stable in the last couple of years.
| 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.
The number of shares outstanding for MSFT remains at a similar level compared to 1 year ago.
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 9.98. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
MSFT's Altman-Z score of 9.98 is amongst the best of the industry. MSFT outperforms 87.50% 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.
Looking at the Debt to FCF ratio, with a value of 1.25, MSFT is in the better half of the industry, outperforming 72.86% 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.
With a Debt to Equity ratio value of 0.24, MSFT perfoms like the industry average, outperforming 43.21% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.98 |
ROIC/WACC1.97
WACC11.19%
2.3 Liquidity
A Current Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Current ratio of 1.35. This is comparable to the rest of the industry: MSFT outperforms 44.64% of its industry peers.
A Quick Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio of 1.35. This is comparable to the rest of the industry: MSFT outperforms 44.64% 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 | 1.35 | ||
| 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.
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 14.93%.
MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.52% yearly.
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
The Earnings Per Share is expected to grow by 15.23% 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 11.89% yearly.
EPS Next Y15.95%
EPS Next 2Y16.49%
EPS Next 3Y17.21%
EPS Next 5Y15.23%
Revenue Next Year15.5%
Revenue Next 2Y14.92%
Revenue Next 3Y14.9%
Revenue Next 5Y11.89%
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
With a Price/Earnings ratio of 37.15, MSFT can be considered very expensive at the moment.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 61.07% of the companies in the same industry.
When comparing the Price/Earnings ratio of MSFT to the average of the S&P500 Index (27.13), we can say MSFT is valued slightly more expensively.
A Price/Forward Earnings ratio of 32.04 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 61.07% of the companies are valued more expensively.
MSFT is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.15 | ||
| Fwd PE | 32.04 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than 77.50% of the companies in the same industry.
MSFT's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.59 | ||
| EV/EBITDA | 22.72 |
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 17.21% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.33
PEG (5Y)1.97
EPS Next 2Y16.49%
EPS Next 3Y17.21%
5. Dividend
5.1 Amount
With a yearly dividend of 0.65%, 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 51.61. MSFT pays more dividend than 90.71% of the companies in the same industry.
With a Dividend Yield of 0.65, MSFT pays less dividend than the S&P500 average, which is at 2.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.65% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)10.24%
Div Incr Years20
Div Non Decr Years20
5.3 Sustainability
MSFT pays out 23.65% 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.
DP23.65%
EPS Next 2Y16.49%
EPS Next 3Y17.21%
506.69
-2.95 (-0.58%)
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 Change-0.03%
Market Cap3766.31B
Analysts85.29
Price Target615.98 (21.57%)
Short Float %0.71%
Short Ratio2.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.65% |
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)14.12%
PT rev (3m)20.72%
EPS NQ rev (1m)1.93%
EPS NQ rev (3m)3.37%
EPS NY rev (1m)2.74%
EPS NY rev (3m)2.81%
Revenue NQ rev (1m)1.38%
Revenue NQ rev (3m)2.31%
Revenue NY rev (1m)1.75%
Revenue NY rev (3m)1.81%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.15 | ||
| Fwd PE | 32.04 | ||
| P/S | 13.37 | ||
| P/FCF | 52.59 | ||
| P/OCF | 27.66 | ||
| P/B | 10.97 | ||
| P/tB | 18.7 | ||
| EV/EBITDA | 22.72 |
EPS(TTM)13.64
EY2.69%
EPS(NY)15.81
Fwd EY3.12%
FCF(TTM)9.63
FCFY1.9%
OCF(TTM)18.32
OCFY3.62%
SpS37.9
BVpS46.21
TBVpS27.09
PEG (NY)2.33
PEG (5Y)1.97
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 | 9.98 |
F-Score5
WACC11.19%
ROIC/WACC1.97
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 3Y17.21%
EPS Next 5Y15.23%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
Revenue Next Year15.5%
Revenue Next 2Y14.92%
Revenue Next 3Y14.9%
Revenue Next 5Y11.89%
EBIT growth 1Y17.45%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year49.13%
EBIT Next 3Y27.48%
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%