MICROSOFT CORP-CDR (MSFT.CA) Stock Fundamental Analysis
Canada - TSX:MSFT - CA59516M1041
36.57 CAD
+6.27 (+20.69%)
We assign a fundamental rating of 7 out of 10 to MSFT. MSFT was compared to 64 industry peers in the Software industry. MSFT has an excellent profitability rating, but there are some minor concerns on its financial health. MSFT may be a bit undervalued, certainly considering the very reasonable score on growth With these ratings, MSFT could be worth investigating further for value 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.
MSFT had positive earnings in each of the past 5 years.
Each year in the past 5 years MSFT had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 17.37%, MSFT belongs to the top of the industry, outperforming 93.94% of the companies in the same industry.
Looking at the Return On Equity, with a value of 30.64%, MSFT belongs to the top of the industry, outperforming 93.94% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 22.54%, MSFT belongs to the top of the industry, outperforming 92.42% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 12.21%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.37% | ||
| ROE | 30.64% | ||
| ROIC | 22.54% |
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
1.3 Margins
MSFT's Profit Margin of 35.43% is amongst the best of the industry. MSFT outperforms 95.45% of its industry peers.
MSFT's Profit Margin has improved in the last couple of years.
MSFT has a better Operating Margin (44.96%) than 98.48% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
MSFT's Gross Margin of 69.41% is fine compared to the rest of the industry. MSFT outperforms 69.70% of its industry peers.
MSFT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 44.96% | ||
| PM (TTM) | 35.43% | ||
| GM | 69.41% |
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
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 about the same amout of shares outstanding than it did 1 year ago.
MSFT has less shares outstanding than it did 5 years ago.
The debt/assets ratio for MSFT has been reduced compared to a year ago.
2.2 Solvency
MSFT has an Altman-Z score of 2.24. This is not the best score and indicates that MSFT is in the grey zone with still only limited risk for bankruptcy at the moment.
MSFT has a Altman-Z score of 2.24. This is in the better half of the industry: MSFT outperforms 63.64% of its industry peers.
The Debt to FCF ratio of MSFT is 1.16, which is an excellent value as it means it would take MSFT, only 1.16 years of fcf income to pay off all of its debts.
MSFT's Debt to FCF ratio of 1.16 is fine compared to the rest of the industry. MSFT outperforms 78.79% of its industry peers.
MSFT has a Debt/Equity ratio of 0.24. This is a healthy value indicating a solid balance between debt and equity.
MSFT's Debt to Equity ratio of 0.24 is in line compared to the rest of the industry. MSFT outperforms 57.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.16 | ||
| Altman-Z | 2.24 |
ROIC/WACC1.95
WACC11.59%
2.3 Liquidity
A Current Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT's Current ratio of 1.35 is in line compared to the rest of the industry. MSFT outperforms 57.58% of its industry peers.
MSFT has a Quick Ratio of 1.34. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
With a Quick ratio value of 1.34, MSFT perfoms like the industry average, outperforming 57.58% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.34 |
3. Growth
3.1 Past
MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.30%, which is quite good.
The Earnings Per Share has been growing by 19.98% 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 15.04%.
Measured over the past years, MSFT shows a quite strong growth in Revenue. The Revenue has been growing by 14.26% on average per year.
EPS 1Y (TTM)12.3%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%10.24%
Revenue 1Y (TTM)15.04%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%12.27%
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 14.82% yearly.
The Revenue is expected to grow by 13.95% on average over the next years. This is quite good.
EPS Next Y13.17%
EPS Next 2Y13.6%
EPS Next 3Y14.77%
EPS Next 5Y14.82%
Revenue Next Year13.05%
Revenue Next 2Y13.39%
Revenue Next 3Y13.84%
Revenue Next 5Y13.95%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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
A Price/Earnings ratio of 2.07 indicates a rather cheap valuation of MSFT.
MSFT's Price/Earnings ratio is rather cheap when compared to the industry. MSFT is cheaper than 98.48% of the companies in the same industry.
MSFT's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.20.
Based on the Price/Forward Earnings ratio of 1.69, the valuation of MSFT can be described as very cheap.
Based on the Price/Forward Earnings ratio, MSFT is valued cheaper than 96.97% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.70, MSFT is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 2.07 | ||
| Fwd PE | 1.69 |
4.2 Price Multiples
98.48% of the companies in the same industry are more expensive than MSFT, based on the Enterprise Value to EBITDA ratio.
MSFT's Price/Free Cash Flow ratio is rather cheap when compared to the industry. MSFT is cheaper than 96.97% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 2.73 | ||
| EV/EBITDA | 0.77 |
4.3 Compensation for Growth
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of MSFT may justify a higher PE ratio.
A more expensive valuation may be justified as MSFT's earnings are expected to grow with 14.77% in the coming years.
PEG (NY)0.16
PEG (5Y)0.1
EPS Next 2Y13.6%
EPS Next 3Y14.77%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.80%, which is pretty low.
MSFT's Dividend Yield is rather good when compared to the industry average which is at 1.46. MSFT pays more dividend than 92.42% of the companies in the same industry.
With a Dividend Yield of 0.80, MSFT pays less dividend than the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
5.2 History
On average, the dividend of MSFT grows each year by 10.19%, which is quite nice.
MSFT has been paying a dividend for over 5 years, so it has already some track record.
Dividend Growth(5Y)10.19%
Div Incr YearsN/A
Div Non Decr YearsN/A
5.3 Sustainability
MSFT pays out 24.68% of its income as dividend. This is a sustainable payout ratio.
The dividend of MSFT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP24.68%
EPS Next 2Y13.6%
EPS Next 3Y14.77%
TSX:MSFT (9/16/2025, 7:00:00 PM)
36.57
+6.27 (+20.69%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.18%
Inst Owner ChangeN/A
Ins Owners0.03%
Ins Owner ChangeN/A
Market Cap271.86B
Analysts84.92
Price TargetN/A
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
Yearly Dividend2.93
Dividend Growth(5Y)10.19%
DP24.68%
Div Incr YearsN/A
Div Non Decr YearsN/A
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.11%
Min EPS beat(2)1.79%
Max EPS beat(2)4.43%
EPS beat(4)3
Avg EPS beat(4)1.76%
Min EPS beat(4)-1.43%
Max EPS beat(4)4.43%
EPS beat(8)7
Avg EPS beat(8)3.99%
EPS beat(12)8
Avg EPS beat(12)2.17%
EPS beat(16)12
Avg EPS beat(16)3.56%
Revenue beat(2)0
Avg Revenue beat(2)-0.54%
Min Revenue beat(2)-0.75%
Max Revenue beat(2)-0.32%
Revenue beat(4)0
Avg Revenue beat(4)-0.7%
Min Revenue beat(4)-1.44%
Max Revenue beat(4)-0.26%
Revenue beat(8)2
Avg Revenue beat(8)-0.1%
Revenue beat(12)2
Avg Revenue beat(12)-0.7%
Revenue beat(16)4
Avg Revenue beat(16)-0.36%
PT rev (1m)N/A
PT rev (3m)N/A
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)N/A
EPS NY rev (3m)N/A
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)N/A
Revenue NY rev (3m)N/A
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 2.07 | ||
| Fwd PE | 1.69 | ||
| P/S | 0.73 | ||
| P/FCF | 2.73 | ||
| P/OCF | 1.52 | ||
| P/B | 0.63 | ||
| P/tB | 1.21 | ||
| EV/EBITDA | 0.77 |
EPS(TTM)17.63
EY48.21%
EPS(NY)21.64
Fwd EY59.16%
FCF(TTM)13.37
FCFY36.57%
OCF(TTM)23.98
OCFY65.58%
SpS49.99
BVpS57.8
TBVpS30.19
PEG (NY)0.16
PEG (5Y)0.1
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.37% | ||
| ROE | 30.64% | ||
| ROCE | 27.7% | ||
| ROIC | 22.54% | ||
| ROICexc | 27.11% | ||
| ROICexgc | 45.87% | ||
| OM | 44.96% | ||
| PM (TTM) | 35.43% | ||
| GM | 69.41% | ||
| FCFM | 26.75% |
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
ROICexc(3y)35.43%
ROICexc(5y)40.49%
ROICexgc(3y)63.99%
ROICexgc(5y)78.75%
ROCE(3y)29.44%
ROCE(5y)28%
ROICexcg growth 3Y-19.4%
ROICexcg growth 5Y-12.98%
ROICexc growth 3Y-17.33%
ROICexc growth 5Y-7.77%
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
F-Score6
Asset Turnover0.49
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.16 | ||
| Debt/EBITDA | 0.51 | ||
| Cap/Depr | 208.71% | ||
| Cap/Sales | 21.22% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.01% | ||
| Profit Quality | 75.51% | ||
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.34 | ||
| Altman-Z | 2.24 |
F-Score6
WACC11.59%
ROIC/WACC1.95
Cap/Depr(3y)189.18%
Cap/Depr(5y)172.93%
Cap/Sales(3y)14.49%
Cap/Sales(5y)13.3%
Profit Quality(3y)85.27%
Profit Quality(5y)89.91%
High Growth Momentum
Growth
EPS 1Y (TTM)12.3%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%10.24%
EPS Next Y13.17%
EPS Next 2Y13.6%
EPS Next 3Y14.77%
EPS Next 5Y14.82%
Revenue 1Y (TTM)15.04%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%12.27%
Revenue Next Year13.05%
Revenue Next 2Y13.39%
Revenue Next 3Y13.84%
Revenue Next 5Y13.95%
EBIT growth 1Y17.09%
EBIT growth 3Y16.11%
EBIT growth 5Y20.56%
EBIT Next Year40.23%
EBIT Next 3Y23.1%
EBIT Next 5Y19.13%
FCF growth 1Y17.47%
FCF growth 3Y9.69%
FCF growth 5Y14.13%
OCF growth 1Y48.82%
OCF growth 3Y15.6%
OCF growth 5Y17.83%