MICROSOFT CORP (MSFT)
US5949181045 - Common Stock
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 276 industry peers in the Software industry. Both the health and profitability get an excellent rating, making MSFT a very profitable company, without any liquidiy or solvency issues. MSFT is growing strongly while it is still valued neutral. This is a good combination! MSFT also has an excellent dividend rating. This makes MSFT very considerable 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.
In the past 5 years MSFT has always been profitable.
In the past 5 years MSFT always reported a positive cash flow from operatings.
1.2 Ratios
MSFT has a better Return On Assets (17.54%) than 97.08% of its industry peers.
The Return On Equity of MSFT (34.64%) is better than 95.26% of its industry peers.
MSFT has a better Return On Invested Capital (22.41%) than 97.45% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 10.10%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.54% | ||
| ROE | 34.64% | ||
| ROIC | 22.41% |
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
With an excellent Profit Margin value of 36.27%, MSFT belongs to the best of the industry, outperforming 96.35% of the companies in the same industry.
MSFT's Profit Margin has improved in the last couple of years.
MSFT's Operating Margin of 44.17% is amongst the best of the industry. MSFT outperforms 100.00% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 69.75%, MSFT perfoms like the industry average, outperforming 58.39% 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 | 44.17% | ||
| PM (TTM) | 36.27% | ||
| GM | 69.75% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MSFT is creating value.
The number of shares outstanding for MSFT has been reduced compared to 1 year ago.
The number of shares outstanding for MSFT has been reduced compared to 5 years ago.
MSFT has a better debt/assets ratio than last year.
2.2 Solvency
MSFT has an Altman-Z score of 9.35. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
MSFT has a Altman-Z score of 9.35. This is amongst the best in the industry. MSFT outperforms 86.50% of its industry peers.
The Debt to FCF ratio of MSFT is 1.40, which is an excellent value as it means it would take MSFT, only 1.40 years of fcf income to pay off all of its debts.
MSFT has a Debt to FCF ratio of 1.40. This is in the better half of the industry: MSFT outperforms 72.99% of its industry peers.
A Debt/Equity ratio of 0.38 indicates that MSFT is not too dependend on debt financing.
MSFT has a Debt to Equity ratio (0.38) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.38 | ||
| Debt/FCF | 1.4 | ||
| Altman-Z | 9.35 |
ROIC/WACC2.25
WACC9.98%
2.3 Liquidity
A Current Ratio of 1.22 indicates that MSFT should not have too much problems paying its short term obligations.
With a Current ratio value of 1.22, MSFT is not doing good in the industry: 66.79% of the companies in the same industry are doing better.
A Quick Ratio of 1.20 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio of 1.20. This is in the lower half of the industry: MSFT underperforms 64.60% 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 | 1.22 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 21.27% over the past year.
Measured over the past years, MSFT shows a very strong growth in Earnings Per Share. The EPS has been growing by 20.38% on average per year.
The Revenue has grown by 11.51% in the past year. This is quite good.
The Revenue has been growing by 13.94% on average over the past years. This is quite good.
EPS 1Y (TTM)21.27%
EPS 3Y19.49%
EPS 5Y20.38%
EPS growth Q2Q26.29%
Revenue 1Y (TTM)11.51%
Revenue growth 3Y14.01%
Revenue growth 5Y13.94%
Revenue growth Q2Q17.58%
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 15.10% yearly.
Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 13.89% on average per year.
EPS Next Y21.09%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
EPS Next 5Y15.1%
Revenue Next Year15.56%
Revenue Next 2Y14.94%
Revenue Next 3Y14.74%
Revenue Next 5Y13.89%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
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.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 36.74, MSFT can be considered very expensive at the moment.
MSFT's Price/Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 69.71% of the companies in the same industry.
MSFT's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 24.92.
With a Price/Forward Earnings ratio of 29.80, MSFT can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 72.26% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.49. MSFT is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.74 | ||
| Fwd PE | 29.8 |
4.2 Price Multiples
82.12% of the companies in the same industry are more expensive than MSFT, based on the Enterprise Value to EBITDA ratio.
65.33% 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 | 44.76 | ||
| EV/EBITDA | 24.51 |
4.3 Compensation for Growth
MSFT's 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.
MSFT's earnings are expected to grow with 17.93% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.74
PEG (5Y)1.8
EPS Next 2Y17.89%
EPS Next 3Y17.93%
5. Dividend
5.1 Amount
With a yearly dividend of 0.73%, MSFT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 11.59, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.97% of the companies listed in the same industry.
With a Dividend Yield of 0.73, MSFT pays less dividend than the S&P500 average, which is at 2.43.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)10%
Div Incr Years18
Div Non Decr Years18
5.3 Sustainability
25.12% 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.
DP25.12%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
MICROSOFT CORP
NASDAQ:MSFT (4/26/2024, 7:05:05 PM)
After market: 406.02 -0.3 (-0.07%)406.32
+7.28 (+1.82%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners71.95%
Inst Owner Change-0.45%
Ins Owners5.99%
Ins Owner Change-0.04%
Market Cap3019.14B
Analysts86.56
Price Target471.52 (16.05%)
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
Dividend Growth(5Y)10%
DP25.12%
Div Incr Years18
Div Non Decr Years18
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.88%
Min EPS beat(2)3.27%
Max EPS beat(2)10.49%
EPS beat(4)4
Avg EPS beat(4)6.21%
Min EPS beat(4)3.27%
Max EPS beat(4)10.49%
EPS beat(8)5
Avg EPS beat(8)2.37%
EPS beat(12)9
Avg EPS beat(12)4.16%
EPS beat(16)13
Avg EPS beat(16)6.37%
Revenue beat(2)1
Avg Revenue beat(2)0.56%
Min Revenue beat(2)-0.51%
Max Revenue beat(2)1.63%
Revenue beat(4)2
Avg Revenue beat(4)0.5%
Min Revenue beat(4)-0.69%
Max Revenue beat(4)1.63%
Revenue beat(8)2
Avg Revenue beat(8)-0.7%
Revenue beat(12)4
Avg Revenue beat(12)-0.25%
Revenue beat(16)8
Avg Revenue beat(16)0.52%
PT rev (1m)1.2%
PT rev (3m)10.98%
EPS NQ rev (1m)0%
EPS NQ rev (3m)6.74%
EPS NY rev (1m)-0.12%
EPS NY rev (3m)3.64%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.29%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)0.42%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.74 | ||
| Fwd PE | 29.8 | ||
| P/S | 13.27 | ||
| P/FCF | 44.76 | ||
| P/OCF | 29.41 | ||
| P/B | 12.67 | ||
| P/tB | 33.76 | ||
| EV/EBITDA | 24.51 |
EPS(TTM)11.06
EY2.72%
EPS(NY)13.63
Fwd EY3.36%
FCF(TTM)9.08
FCFY2.23%
OCF(TTM)13.81
OCFY3.4%
SpS30.63
BVpS32.07
TBVpS12.04
PEG (NY)1.74
PEG (5Y)1.8
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.54% | ||
| ROE | 34.64% | ||
| ROCE | 28.76% | ||
| ROIC | 22.41% | ||
| ROICexc | 28.56% | ||
| ROICexgc | 57.52% | ||
| OM | 44.17% | ||
| PM (TTM) | 36.27% | ||
| GM | 69.75% | ||
| FCFM | 29.64% |
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 Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.38 | ||
| Debt/FCF | 1.4 | ||
| Debt/EBITDA | 0.77 | ||
| Cap/Depr | 203.44% | ||
| Cap/Sales | 15.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.11% | ||
| Profit Quality | 81.71% | ||
| Current Ratio | 1.22 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 9.35 |
F-Score6
WACC9.98%
ROIC/WACC2.25
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)21.27%
EPS 3Y19.49%
EPS 5Y20.38%
EPS growth Q2Q26.29%
EPS Next Y21.09%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
EPS Next 5Y15.1%
Revenue 1Y (TTM)11.51%
Revenue growth 3Y14.01%
Revenue growth 5Y13.94%
Revenue growth Q2Q17.58%
Revenue Next Year15.56%
Revenue Next 2Y14.94%
Revenue Next 3Y14.74%
Revenue Next 5Y13.89%
EBIT growth 1Y19.7%
EBIT growth 3Y19.2%
EBIT growth 5Y20.67%
EBIT Next Year45.68%
EBIT Next 3Y24.68%
EBIT Next 5YN/A
FCF growth 1Y11.12%
FCF growth 3Y9.55%
FCF growth 5Y13.02%
OCF growth 1Y22.33%
OCF growth 3Y13.01%
OCF growth 5Y14.82%