MICROSOFT CORP (MSFT)
US5949181045 - Common Stock
We assign a fundamental rating of 7 out of 10 to MSFT. MSFT was compared to 277 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. 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
In the past year MSFT was profitable.
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's Return On Assets of 17.80% is amongst the best of the industry. MSFT outperforms 96.72% of its industry peers.
MSFT has a Return On Equity of 34.04%. This is amongst the best in the industry. MSFT outperforms 95.26% of its industry peers.
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.
MSFT had an Average Return On Invested Capital over the past 3 years of 24.79%. This is significantly above the industry average of 10.37%.
| 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 Profit Margin of 36.43%. This is amongst the best in the industry. MSFT outperforms 96.72% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT has a better Operating Margin (44.70%) than 100.00% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
MSFT has a Gross Margin (69.89%) which is in line with its industry peers.
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), MSFT is creating value.
MSFT has less shares outstanding than it did 1 year ago.
The number of shares outstanding for MSFT has been reduced compared to 5 years ago.
The debt/assets ratio for MSFT has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 9.72 indicates that MSFT is not in any danger for bankruptcy at the moment.
MSFT has a better Altman-Z score (9.72) than 85.40% 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.
The Debt to FCF ratio of MSFT (1.25) is better than 74.09% of its industry peers.
MSFT has a Debt/Equity ratio of 0.33. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of MSFT (0.33) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.72 |
ROIC/WACC2.31
WACC9.97%
2.3 Liquidity
A Current Ratio of 1.24 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT's Current ratio of 1.24 is on the low side compared to the rest of the industry. MSFT is outperformed by 66.06% of its industry peers.
A Quick Ratio of 1.23 indicates that MSFT should not have too much problems paying its short term obligations.
The Quick ratio of MSFT (1.23) is worse than 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
The Earnings Per Share has grown by an impressive 23.53% over the past year.
MSFT shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.38% yearly.
The Revenue has grown by 13.97% in the past year. This is quite good.
Measured over the past years, MSFT shows a quite strong growth in Revenue. The Revenue has been growing by 13.94% on average per year.
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
MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.40% yearly.
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
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.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 35.80 indicates a quite expensive valuation of MSFT.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 70.44% of the companies in the same industry.
MSFT is valuated rather expensively when we compare the Price/Earnings ratio to 28.02, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 30.33, which means the current valuation is very expensive for MSFT.
Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than 69.71% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.58, MSFT is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.8 | ||
| Fwd PE | 30.33 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued cheaply inside the industry as 83.21% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 64.96% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 43.55 | ||
| EV/EBITDA | 23.9 |
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)1.7
PEG (5Y)1.76
EPS Next 2Y17.89%
EPS Next 3Y17.93%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.75%, which is pretty low.
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.
With a Dividend Yield of 0.75, MSFT pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.75% |
5.2 History
On average, the dividend of MSFT grows each year by 10.00%, which is quite nice.
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%
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.
MSFT's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP24.66%
EPS Next 2Y17.89%
EPS Next 3Y17.93%
MICROSOFT CORP
NASDAQ:MSFT (5/6/2024, 7:16:02 PM)
Premarket: 412.27 -1.27 (-0.31%)413.54
+6.88 (+1.69%)
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 Cap3073.56B
Analysts86.67
Price Target477.05 (15.36%)
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 | 35.8 | ||
| Fwd PE | 30.33 | ||
| P/S | 12.99 | ||
| P/FCF | 43.55 | ||
| P/OCF | 27.91 | ||
| P/B | 12.14 | ||
| P/tB | 29.23 | ||
| EV/EBITDA | 23.9 |
EPS(TTM)11.55
EY2.79%
EPS(NY)13.63
Fwd EY3.3%
FCF(TTM)9.5
FCFY2.3%
OCF(TTM)14.82
OCFY3.58%
SpS31.83
BVpS34.06
TBVpS14.15
PEG (NY)1.7
PEG (5Y)1.76
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 | 9.72 |
F-Score6
WACC9.97%
ROIC/WACC2.31
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%