MICROSOFT CORP (MSFT) Fundamental Analysis & Valuation

NASDAQ:MSFT • US5949181045

Current stock price

372.74 USD
-10.26 (-2.68%)
At close:
374.677 USD
+1.94 (+0.52%)
After Hours:

This MSFT fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.

8

1. MSFT Profitability Analysis

1.1 Basic Checks

  • MSFT had positive earnings in the past year.
  • MSFT had a positive operating cash flow in the past year.
  • In the past 5 years MSFT has always 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 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20B 40B 60B 80B 100B

1.2 Ratios

  • MSFT has a Return On Assets of 17.93%. This is amongst the best in the industry. MSFT outperforms 93.88% of its industry peers.
  • With an excellent Return On Equity value of 30.51%, MSFT belongs to the best of the industry, outperforming 92.09% of the companies in the same industry.
  • MSFT has a Return On Invested Capital of 21.86%. This is amongst the best in the industry. MSFT outperforms 94.60% 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 10.92%.
Industry RankSector Rank
ROA 17.93%
ROE 30.51%
ROIC 21.86%
ROA(3y)17.07%
ROA(5y)17.9%
ROE(3y)32.52%
ROE(5y)36.88%
ROIC(3y)22.94%
ROIC(5y)23.52%
MSFT Yearly ROA, ROE, ROICMSFT Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10 20 30 40

1.3 Margins

  • With an excellent Profit Margin value of 39.04%, MSFT belongs to the best of the industry, outperforming 95.32% of the companies in the same industry.
  • MSFT's Profit Margin has improved in the last couple of years.
  • MSFT has a Operating Margin of 46.67%. This is amongst the best in the industry. MSFT outperforms 98.56% of its industry peers.
  • In the last couple of years the Operating Margin of MSFT has grown nicely.
  • MSFT has a Gross Margin (68.59%) 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 46.67%
PM (TTM) 39.04%
GM 68.59%
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%
MSFT Yearly Profit, Operating, Gross MarginsMSFT Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20 40 60

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8

2. MSFT Health Analysis

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.
  • Compared to 5 years ago, MSFT has less shares outstanding
  • Compared to 1 year ago, MSFT has an improved debt to assets ratio.
MSFT Yearly Shares OutstandingMSFT Yearly Shares OutstandingYearly Shares Outstanding 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2B 4B 6B
MSFT Yearly Total Debt VS Total AssetsMSFT Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 200B 400B 600B

2.2 Solvency

  • An Altman-Z score of 8.07 indicates that MSFT is not in any danger for bankruptcy at the moment.
  • The Altman-Z score of MSFT (8.07) is better than 88.13% of its industry peers.
  • The Debt to FCF ratio of MSFT is 1.30, which is an excellent value as it means it would take MSFT, only 1.30 years of fcf income to pay off all of its debts.
  • Looking at the Debt to FCF ratio, with a value of 1.30, MSFT is in the better half of the industry, outperforming 70.86% of the companies in the same industry.
  • MSFT has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
  • Looking at the Debt to Equity ratio, with a value of 0.23, MSFT is in line with its industry, outperforming 43.88% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 0.23
Debt/FCF 1.3
Altman-Z 8.07
ROIC/WACC2.02
WACC10.83%
MSFT Yearly LT Debt VS Equity VS FCFMSFT Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 100B 200B 300B

2.3 Liquidity

  • MSFT has a Current Ratio of 1.39. 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 (1.39) which is comparable to the rest of the industry.
  • A Quick Ratio of 1.38 indicates that MSFT should not have too much problems paying its short term obligations.
  • MSFT's Quick ratio of 1.38 is in line compared to the rest of the industry. MSFT outperforms 43.88% 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 RankSector Rank
Current Ratio 1.39
Quick Ratio 1.38
MSFT Yearly Current Assets VS Current LiabilitesMSFT Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 50B 100B 150B

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WACCDebt/EquityHow to determine the health of a companyAltman-Z scoreShow peers with great health

7

3. MSFT Growth Analysis

3.1 Past

  • MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 23.83%, which is quite impressive.
  • MSFT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.86% yearly.
  • MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 16.67%.
  • The Revenue has been growing by 14.52% on average over the past years. This is quite good.
EPS 1Y (TTM)23.83%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%28.17%
Revenue 1Y (TTM)16.67%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%16.72%

3.2 Future

  • MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 18.94% yearly.
  • Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 16.18% on average per year.
EPS Next Y24.05%
EPS Next 2Y19.2%
EPS Next 3Y18.61%
EPS Next 5Y18.94%
Revenue Next Year17.51%
Revenue Next 2Y16.53%
Revenue Next 3Y16.54%
Revenue Next 5Y16.18%

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.
MSFT Yearly Revenue VS EstimatesMSFT Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 200B 400B 600B
MSFT Yearly EPS VS EstimatesMSFT Yearly EPS VS EstimatesYearly EPS VS Estimates 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 10 20 30 40

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4

4. MSFT Valuation Analysis

4.1 Price/Earnings Ratio

  • MSFT is valuated rather expensively with a Price/Earnings ratio of 24.24.
  • Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 62.59% of the companies in the same industry.
  • The average S&P500 Price/Earnings ratio is at 25.50. MSFT is around the same levels.
  • MSFT is valuated rather expensively with a Price/Forward Earnings ratio of 19.23.
  • Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 65.11% of the companies listed in the same industry.
  • MSFT's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.67.
Industry RankSector Rank
PE 24.24
Fwd PE 19.23
MSFT Price Earnings VS Forward Price EarningsMSFT Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40

4.2 Price Multiples

  • Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than 78.06% of the companies in the same industry.
  • MSFT's Price/Free Cash Flow is on the same level as the industry average.
Industry RankSector Rank
P/FCF 35.75
EV/EBITDA 15.51
MSFT Per share dataMSFT EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 10 20 30 40 50

4.3 Compensation for Growth

  • MSFT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
  • The excellent profitability rating of MSFT may justify a higher PE ratio.
  • MSFT's earnings are expected to grow with 18.61% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.01
PEG (5Y)1.29
EPS Next 2Y19.2%
EPS Next 3Y18.61%

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Price/EarningsPrice/FCFFCF per shareEV/EBITDAPEG RATIOShow best valued peers

7

5. MSFT Dividend Analysis

5.1 Amount

  • MSFT has a yearly dividend return of 0.94%, which is pretty low.
  • The stock price of MSFT dropped by -23.57% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
  • Compared to an average industry Dividend Yield of 0.64, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.37% of the companies listed in the same industry.
  • With a Dividend Yield of 0.94, MSFT pays less dividend than the S&P500 average, which is at 1.89.
Industry RankSector Rank
Dividend Yield 0.94%

5.2 History

  • On average, the dividend of MSFT grows each year by 10.24%, which is quite nice.
  • MSFT has been paying a dividend for at least 10 years, so it has 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
MSFT Yearly Dividends per shareMSFT Yearly Dividends per shareYearly Dividends per share 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 1 2 3

5.3 Sustainability

  • MSFT pays out 21.19% 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.
DP21.19%
EPS Next 2Y19.2%
EPS Next 3Y18.61%
MSFT Yearly Income VS Free CF VS DividendMSFT Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20B 40B 60B 80B 100B
MSFT Dividend Payout.MSFT Dividend Payout, showing the Payout Ratio.MSFT Dividend Payout.PayoutRetained Earnings

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MSFT Fundamentals: All Metrics, Ratios and Statistics

MICROSOFT CORP

NASDAQ:MSFT (3/24/2026, 8:00:02 PM)

After market: 374.677 +1.94 (+0.52%)

372.74

-10.26 (-2.68%)

Chartmill FA Rating
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)01-28
Earnings (Next)04-28
Inst Owners75.67%
Inst Owner Change1.38%
Ins Owners0.03%
Ins Owner Change-0.02%
Market Cap2.77T
Revenue(TTM)305.45B
Net Income(TTM)119.26B
Analysts85.45
Price Target608.86 (63.35%)
Short Float %1%
Short Ratio2.04
Dividend
Industry RankSector Rank
Dividend Yield 0.94%
Yearly Dividend3.24
Dividend Growth(5Y)10.24%
DP21.19%
Div Incr Years20
Div Non Decr Years20
Ex-Date02-19
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.54%
Min EPS beat(2)2.62%
Max EPS beat(2)10.46%
EPS beat(4)4
Avg EPS beat(4)6.15%
Min EPS beat(4)2.62%
Max EPS beat(4)10.46%
EPS beat(8)7
Avg EPS beat(8)3.96%
EPS beat(12)11
Avg EPS beat(12)4.71%
EPS beat(16)12
Avg EPS beat(16)3.16%
Revenue beat(2)1
Avg Revenue beat(2)0.18%
Min Revenue beat(2)-0.73%
Max Revenue beat(2)1.09%
Revenue beat(4)3
Avg Revenue beat(4)0.57%
Min Revenue beat(4)-0.73%
Max Revenue beat(4)1.54%
Revenue beat(8)3
Avg Revenue beat(8)-0.06%
Revenue beat(12)5
Avg Revenue beat(12)0.13%
Revenue beat(16)5
Avg Revenue beat(16)-0.38%
PT rev (1m)-0.56%
PT rev (3m)-3.88%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)1.35%
EPS NY rev (1m)-0.37%
EPS NY rev (3m)1.14%
Revenue NQ rev (1m)0.01%
Revenue NQ rev (3m)0.25%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.42%
Valuation
Industry RankSector Rank
PE 24.24
Fwd PE 19.23
P/S 9.06
P/FCF 35.75
P/OCF 17.24
P/B 7.08
P/tB 11.03
EV/EBITDA 15.51
EPS(TTM)15.38
EY4.13%
EPS(NY)19.38
Fwd EY5.2%
FCF(TTM)10.43
FCFY2.8%
OCF(TTM)21.62
OCFY5.8%
SpS41.13
BVpS52.64
TBVpS33.8
PEG (NY)1.01
PEG (5Y)1.29
Graham Number134.97
Profitability
Industry RankSector Rank
ROA 17.93%
ROE 30.51%
ROCE 26.63%
ROIC 21.86%
ROICexc 26.24%
ROICexgc 38.24%
OM 46.67%
PM (TTM) 39.04%
GM 68.59%
FCFM 25.34%
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 RankSector Rank
Debt/Equity 0.23
Debt/FCF 1.3
Debt/EBITDA 0.51
Cap/Depr 222.84%
Cap/Sales 27.2%
Interest Coverage 250
Cash Conversion 89.25%
Profit Quality 64.91%
Current Ratio 1.39
Quick Ratio 1.38
Altman-Z 8.07
F-Score6
WACC10.83%
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)23.83%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%28.17%
EPS Next Y24.05%
EPS Next 2Y19.2%
EPS Next 3Y18.61%
EPS Next 5Y18.94%
Revenue 1Y (TTM)16.67%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%16.72%
Revenue Next Year17.51%
Revenue Next 2Y16.53%
Revenue Next 3Y16.54%
Revenue Next 5Y16.18%
EBIT growth 1Y21.11%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year55.61%
EBIT Next 3Y28.93%
EBIT Next 5Y23.22%
FCF growth 1Y14.78%
FCF growth 3Y3.2%
FCF growth 5Y9.62%
OCF growth 1Y56.37%
OCF growth 3Y15.21%
OCF growth 5Y17.55%

MICROSOFT CORP / MSFT Fundamental Analysis FAQ

Can you provide the ChartMill fundamental rating for MICROSOFT CORP?

ChartMill assigns a fundamental rating of 7 / 10 to MSFT.


Can you provide the valuation status for MICROSOFT CORP?

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 is the financial health of MICROSOFT CORP (MSFT) stock?

The financial health rating of MICROSOFT CORP (MSFT) is 8 / 10.


What is the expected EPS growth for MICROSOFT CORP (MSFT) stock?

The Earnings per Share (EPS) of MICROSOFT CORP (MSFT) is expected to grow by 24.05% in the next year.