MICROSOFT CORP-CDR (MSFT.CA) Stock Fundamental Analysis
TSX:MSFT - Toronto Stock Exchange - CA59516M1041 - Currency: CAD
We assign a fundamental rating of 7 out of 10 to MSFT. MSFT was compared to 66 industry peers in the Software industry. MSFT scores excellent on profitability, but there are some minor concerns on its financial health. A decent growth rate in combination with a cheap valuation! Better keep an eye on MSFT. These ratings would make MSFT suitable for value investing!
1. Profitability
1.1 Basic Checks
In the past year MSFT was profitable.
In the past year MSFT had a positive cash flow from operations.
Each year in the past 5 years MSFT has been profitable.
Each year in the past 5 years MSFT had a positive operating cash flow.
1.2 Ratios
The Return On Assets of MSFT (17.37%) is better than 93.94% of its industry peers.
MSFT has a Return On Equity of 30.64%. This is amongst the best in the industry. MSFT outperforms 93.94% of its industry peers.
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.
MSFT had an Average Return On Invested Capital over the past 3 years of 23.84%. This is significantly above the industry average of 12.17%.
| 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
Looking at the Profit Margin, with a value of 35.43%, MSFT belongs to the top of the industry, outperforming 95.45% of the companies in the same industry.
In the last couple of years the Profit Margin of MSFT has grown nicely.
The Operating Margin of MSFT (44.96%) is better than 98.48% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
The Gross Margin of MSFT (69.41%) is better than 69.70% of 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 | 44.96% | ||
| 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.
The number of shares outstanding for MSFT remains at a similar level 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
An Altman-Z score of 2.24 indicates that MSFT is not a great score, but indicates only limited risk for bankruptcy at the moment.
With a decent Altman-Z score value of 2.24, MSFT is doing good in the industry, outperforming 63.64% of the companies in the same industry.
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.
With a Debt to Equity ratio value of 0.24, MSFT perfoms like the industry average, outperforming 57.58% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.16 | ||
| Altman-Z | 2.24 |
ROIC/WACC1.95
WACC11.59%
2.3 Liquidity
MSFT has a Current Ratio of 1.35. 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 (1.35) which is in line with its industry peers.
A Quick Ratio of 1.34 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio of 1.34. This is comparable to the rest of the industry: MSFT outperforms 57.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.34 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 12.30% over the past year.
MSFT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 19.98% yearly.
Looking at the last year, MSFT shows a quite strong growth in Revenue. The Revenue has grown by 15.04% in the last year.
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
Based on estimates for the next years, MSFT will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.82% on average per year.
MSFT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.95% yearly.
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
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
MSFT is valuated cheaply with a Price/Earnings ratio of 1.69.
Based on the Price/Earnings ratio, MSFT is valued cheaply inside the industry as 98.48% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 29.62. MSFT is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 1.37, the valuation of MSFT can be described as very cheap.
MSFT's Price/Forward Earnings ratio is rather cheap when compared to the industry. MSFT is cheaper than 96.97% of the companies in the same industry.
MSFT is valuated cheaply when we compare the Price/Forward Earnings ratio to 22.70, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 1.69 | ||
| Fwd PE | 1.37 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued cheaper than 98.48% of the companies in the same industry.
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 | 2.22 | ||
| EV/EBITDA | 0.77 |
4.3 Compensation for Growth
MSFT's 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)0.13
PEG (5Y)0.08
EPS Next 2Y13.6%
EPS Next 3Y14.77%
5. Dividend
5.1 Amount
With a yearly dividend of 0.80%, MSFT is not a good candidate for dividend investing.
MSFT's Dividend Yield is rather good when compared to the industry average which is at 1.66. MSFT pays more dividend than 92.42% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.27, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.19%!
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
24.68% 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.
DP24.68%
EPS Next 2Y13.6%
EPS Next 3Y14.77%
TSX:MSFT (2/21/2025, 7:00:00 PM)
29.72
-0.58 (-1.91%)
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 Cap220.94B
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 | 1.69 | ||
| Fwd PE | 1.37 | ||
| P/S | 0.59 | ||
| P/FCF | 2.22 | ||
| P/OCF | 1.24 | ||
| P/B | 0.51 | ||
| P/tB | 0.98 | ||
| EV/EBITDA | 0.77 |
EPS(TTM)17.63
EY59.32%
EPS(NY)21.64
Fwd EY72.8%
FCF(TTM)13.37
FCFY45%
OCF(TTM)23.98
OCFY80.69%
SpS49.99
BVpS57.8
TBVpS30.19
PEG (NY)0.13
PEG (5Y)0.08
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%