MICROSOFT CORP (1MSFT.MI) Stock Fundamental Analysis
Europe - Euronext Milan - BIT:1MSFT - US5949181045 - Common Stock
400.25 EUR
+2.85 (+0.72%)
1MSFT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 114 industry peers in the Software industry. 1MSFT scores excellent points on both the profitability and health parts. This is a solid base for a good stock. 1MSFT has a correct valuation and a medium growth rate. With these ratings, 1MSFT could be worth investigating further for quality investing!.
1. Profitability
1.1 Basic Checks
- 1MSFT had positive earnings in the past year.
- 1MSFT had a positive operating cash flow in the past year.
- In the past 5 years 1MSFT has always been profitable.
- In the past 5 years 1MSFT always reported a positive cash flow from operatings.
1.2 Ratios
- 1MSFT has a Return On Assets of 16.49%. This is amongst the best in the industry. 1MSFT outperforms 88.60% of its industry peers.
- The Return On Equity of 1MSFT (28.90%) is better than 83.33% of its industry peers.
- With an excellent Return On Invested Capital value of 22.25%, 1MSFT belongs to the best of the industry, outperforming 92.11% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for 1MSFT is significantly above the industry average of 13.49%.
| 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%, 1MSFT belongs to the top of the industry, outperforming 92.98% of the companies in the same industry.
- 1MSFT's Profit Margin has improved in the last couple of years.
- 1MSFT has a better Operating Margin (46.27%) than 96.49% of its industry peers.
- In the last couple of years the Operating Margin of 1MSFT has grown nicely.
- 1MSFT has a Gross Margin (68.76%) which is comparable to the rest of the industry.
- In the last couple of years the Gross Margin of 1MSFT 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
- 1MSFT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
- Compared to 1 year ago, 1MSFT has about the same amount of shares outstanding.
- The number of shares outstanding for 1MSFT has been reduced compared to 5 years ago.
- Compared to 1 year ago, 1MSFT has an improved debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 9.62 indicates that 1MSFT is not in any danger for bankruptcy at the moment.
- With an excellent Altman-Z score value of 9.62, 1MSFT belongs to the best of the industry, outperforming 85.96% of the companies in the same industry.
- The Debt to FCF ratio of 1MSFT is 1.25, which is an excellent value as it means it would take 1MSFT, only 1.25 years of fcf income to pay off all of its debts.
- 1MSFT has a better Debt to FCF ratio (1.25) than 72.81% of its industry peers.
- A Debt/Equity ratio of 0.24 indicates that 1MSFT is not too dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.24, 1MSFT is in line with its industry, outperforming 53.51% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.62 |
ROIC/WACC2.03
WACC10.97%
2.3 Liquidity
- 1MSFT has a Current Ratio of 1.40. This is a normal value and indicates that 1MSFT is financially healthy and should not expect problems in meeting its short term obligations.
- With a Current ratio value of 1.40, 1MSFT perfoms like the industry average, outperforming 47.37% of the companies in the same industry.
- 1MSFT has a Quick Ratio of 1.39. This is a normal value and indicates that 1MSFT is financially healthy and should not expect problems in meeting its short term obligations.
- 1MSFT's Quick ratio of 1.39 is in line compared to the rest of the industry. 1MSFT outperforms 50.00% of its industry peers.
- 1MSFT 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 | 1.4 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
- 1MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 19.39%, which is quite good.
- The Earnings Per Share has been growing by 18.86% on average over the past years. This is quite good.
- 1MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.59%.
- 1MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.52% yearly.
EPS 1Y (TTM)19.39%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%25.15%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
3.2 Future
- 1MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 18.83% yearly.
- The Revenue is expected to grow by 15.04% on average over the next years. This is quite good.
EPS Next Y22.79%
EPS Next 2Y18.47%
EPS Next 3Y18.31%
EPS Next 5Y18.83%
Revenue Next Year17.06%
Revenue Next 2Y15.95%
Revenue Next 3Y16.12%
Revenue Next 5Y15.04%
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
- The Price/Earnings ratio is 33.00, which means the current valuation is very expensive for 1MSFT.
- Based on the Price/Earnings ratio, 1MSFT is valued a bit cheaper than the industry average as 62.28% of the companies are valued more expensively.
- The average S&P500 Price/Earnings ratio is at 28.82. 1MSFT is around the same levels.
- Based on the Price/Forward Earnings ratio of 24.94, the valuation of 1MSFT can be described as rather expensive.
- Based on the Price/Forward Earnings ratio, 1MSFT is valued a bit cheaper than 65.79% of the companies in the same industry.
- 1MSFT is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.95, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 33 | ||
| Fwd PE | 24.94 |
4.2 Price Multiples
- 1MSFT's Enterprise Value to EBITDA is on the same level as the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as 1MSFT.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 45.49 | ||
| EV/EBITDA | 19.75 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- The excellent profitability rating of 1MSFT may justify a higher PE ratio.
- 1MSFT's earnings are expected to grow with 18.31% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.45
PEG (5Y)1.75
EPS Next 2Y18.47%
EPS Next 3Y18.31%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.81%, 1MSFT is not a good candidate for dividend investing.
- 1MSFT's Dividend Yield is a higher than the industry average which is at 0.68.
- Compared to an average S&P500 Dividend Yield of 1.82, 1MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.81% |
5.2 History
- The dividend of 1MSFT is nicely growing with an annual growth rate of 10.24%!
Dividend Growth(5Y)10.24%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- 1MSFT pays out 23.52% of its income as dividend. This is a sustainable payout ratio.
- 1MSFT's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP23.52%
EPS Next 2Y18.47%
EPS Next 3Y18.31%
MICROSOFT CORP / 1MSFT.MI FAQ
What is the ChartMill fundamental rating of MICROSOFT CORP (1MSFT.MI) stock?
ChartMill assigns a fundamental rating of 7 / 10 to 1MSFT.MI.
Can you provide the valuation status for MICROSOFT CORP?
ChartMill assigns a valuation rating of 4 / 10 to MICROSOFT CORP (1MSFT.MI). This can be considered as Fairly Valued.
What is the profitability of 1MSFT stock?
MICROSOFT CORP (1MSFT.MI) has a profitability rating of 8 / 10.
Can you provide the PE and PB ratios for 1MSFT stock?
The Price/Earnings (PE) ratio for MICROSOFT CORP (1MSFT.MI) is 33 and the Price/Book (PB) ratio is 9.77.
Can you provide the dividend sustainability for 1MSFT stock?
The dividend rating of MICROSOFT CORP (1MSFT.MI) is 5 / 10 and the dividend payout ratio is 23.52%.