MICROSOFT CORP (MSFT)
US5949181045 - Common Stock
Overall MSFT gets a fundamental rating of 7 out of 10. We evaluated MSFT against 278 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 not valued too expensively and it also shows a decent growth rate. MSFT also has an excellent dividend rating. These ratings could make MSFT a good candidate for dividend 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.
Each year in the past 5 years MSFT has been profitable.
MSFT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
MSFT's Return On Assets of 17.31% is amongst the best of the industry. MSFT outperforms 93.88% of its industry peers.
MSFT has a Return On Equity of 31.46%. This is amongst the best in the industry. MSFT outperforms 91.73% of its industry peers.
MSFT's Return On Invested Capital of 22.57% is amongst the best of the industry. MSFT outperforms 94.60% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MSFT is significantly above the industry average of 12.23%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.31% | ||
| ROE | 31.46% | ||
| ROIC | 22.57% |
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
With an excellent Profit Margin value of 35.61%, MSFT belongs to the best of the industry, outperforming 96.40% of the companies in the same industry.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT has a Operating Margin of 44.49%. This is amongst the best in the industry. MSFT outperforms 99.28% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
With a Gross Margin value of 69.35%, MSFT perfoms like the industry average, outperforming 52.88% of the companies in the same industry.
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 | 44.49% | ||
| PM (TTM) | 35.61% | ||
| GM | 69.35% |
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
MSFT has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for MSFT remains at a similar level compared to 1 year ago.
MSFT has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, MSFT has an improved debt to assets ratio.
2.2 Solvency
MSFT has an Altman-Z score of 10.07. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 10.07, MSFT belongs to the best of the industry, outperforming 81.30% of the companies in the same industry.
MSFT has a debt to FCF ratio of 1.05. This is a very positive value and a sign of high solvency as it would only need 1.05 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.05, MSFT is doing good in the industry, outperforming 73.38% of the companies in the same industry.
A Debt/Equity ratio of 0.25 indicates that MSFT is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.25, MSFT is in line with its industry, outperforming 40.29% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.05 | ||
| Altman-Z | 10.07 |
ROIC/WACC1.93
WACC11.7%
2.3 Liquidity
A Current Ratio of 1.30 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Current ratio of 1.30. This is in the lower half of the industry: MSFT underperforms 60.43% of its industry peers.
A Quick Ratio of 1.29 indicates that MSFT should not have too much problems paying its short term obligations.
The Quick ratio of MSFT (1.29) is comparable to the rest of the industry.
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 | 1.3 | ||
| Quick Ratio | 1.29 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 15.98% over the past year.
The Earnings Per Share has been growing by 19.98% on average over the past years. This is quite good.
The Revenue has grown by 16.44% in the past year. This is quite good.
The Revenue has been growing by 14.26% on average over the past years. This is quite good.
EPS 1Y (TTM)15.98%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%10.37%
Revenue 1Y (TTM)16.44%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%16.04%
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 14.88% on average per year.
Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 13.97% on average per year.
EPS Next Y12.47%
EPS Next 2Y13.71%
EPS Next 3Y15.35%
EPS Next 5Y14.88%
Revenue Next Year13.66%
Revenue Next 2Y13.94%
Revenue Next 3Y14.46%
Revenue Next 5Y13.97%
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
The Price/Earnings ratio is 36.02, which means the current valuation is very expensive for MSFT.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than the industry average as 69.42% of the companies are valued more expensively.
MSFT is valuated rather expensively when we compare the Price/Earnings ratio to 27.73, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 28.59, which means the current valuation is very expensive for MSFT.
Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than the industry average as 69.06% of the companies are valued more expensively.
MSFT is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.83, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.02 | ||
| Fwd PE | 28.59 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than the industry average as 79.14% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, MSFT is valued a bit cheaper than 66.91% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 44.67 | ||
| EV/EBITDA | 22.97 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MSFT does not grow enough to justify the current Price/Earnings ratio.
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 15.35% in the coming years.
PEG (NY)2.89
PEG (5Y)1.8
EPS Next 2Y13.71%
EPS Next 3Y15.35%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.76%, which is pretty low.
Compared to an average industry Dividend Yield of 13.45, MSFT pays a better dividend. On top of this MSFT pays more dividend than 92.09% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.24, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.76% |
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 at least 10 years, so it has a reliable track record.
MSFT has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)10.19%
Div Incr Years20
Div Non Decr Years20
5.3 Sustainability
24.63% 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.
DP24.63%
EPS Next 2Y13.71%
EPS Next 3Y15.35%
MICROSOFT CORP
NASDAQ:MSFT (12/20/2024, 8:25:44 PM)
After market: 437.348 +0.75 (+0.17%)436.6
-0.43 (-0.1%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners73.68%
Inst Owner Change0.85%
Ins Owners0.03%
Ins Owner Change0.02%
Market Cap3246.07B
Analysts85.23
Price Target507.69 (16.28%)
Short Float %0.85%
Short Ratio3.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.76% |
Dividend Growth(5Y)10.19%
DP24.63%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.5%
Min EPS beat(2)-1.43%
Max EPS beat(2)4.43%
EPS beat(4)3
Avg EPS beat(4)2.14%
Min EPS beat(4)-1.43%
Max EPS beat(4)4.43%
EPS beat(8)6
Avg EPS beat(8)3.65%
EPS beat(12)8
Avg EPS beat(12)2.45%
EPS beat(16)12
Avg EPS beat(16)4.78%
Revenue beat(2)0
Avg Revenue beat(2)-0.88%
Min Revenue beat(2)-1.44%
Max Revenue beat(2)-0.32%
Revenue beat(4)0
Avg Revenue beat(4)-0.64%
Min Revenue beat(4)-1.44%
Max Revenue beat(4)-0.26%
Revenue beat(8)2
Avg Revenue beat(8)-0.29%
Revenue beat(12)2
Avg Revenue beat(12)-0.67%
Revenue beat(16)5
Avg Revenue beat(16)0.01%
PT rev (1m)0.35%
PT rev (3m)0.01%
EPS NQ rev (1m)0.06%
EPS NQ rev (3m)-4.93%
EPS NY rev (1m)0.02%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-1.36%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.23%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.02 | ||
| Fwd PE | 28.59 | ||
| P/S | 12.77 | ||
| P/FCF | 44.67 | ||
| P/OCF | 26.58 | ||
| P/B | 11.28 | ||
| P/tB | 22.92 | ||
| EV/EBITDA | 22.97 |
EPS(TTM)12.12
EY2.78%
EPS(NY)15.27
Fwd EY3.5%
FCF(TTM)9.77
FCFY2.24%
OCF(TTM)16.43
OCFY3.76%
SpS34.19
BVpS38.7
TBVpS19.05
PEG (NY)2.89
PEG (5Y)1.8
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.31% | ||
| ROE | 31.46% | ||
| ROCE | 27.73% | ||
| ROIC | 22.57% | ||
| ROICexc | 27.95% | ||
| ROICexgc | 50.23% | ||
| OM | 44.49% | ||
| PM (TTM) | 35.61% | ||
| GM | 69.35% | ||
| FCFM | 28.59% |
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-Score5
Asset Turnover0.49
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.05 | ||
| Debt/EBITDA | 0.52 | ||
| Cap/Depr | 192.17% | ||
| Cap/Sales | 19.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.98% | ||
| Profit Quality | 80.28% | ||
| Current Ratio | 1.3 | ||
| Quick Ratio | 1.29 | ||
| Altman-Z | 10.07 |
F-Score5
WACC11.7%
ROIC/WACC1.93
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)15.98%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%10.37%
EPS Next Y12.47%
EPS Next 2Y13.71%
EPS Next 3Y15.35%
EPS Next 5Y14.88%
Revenue 1Y (TTM)16.44%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%16.04%
Revenue Next Year13.66%
Revenue Next 2Y13.94%
Revenue Next 3Y14.46%
Revenue Next 5Y13.97%
EBIT growth 1Y18.95%
EBIT growth 3Y16.11%
EBIT growth 5Y20.56%
EBIT Next Year38.44%
EBIT Next 3Y22.73%
EBIT Next 5Y19.19%
FCF growth 1Y14.73%
FCF growth 3Y9.69%
FCF growth 5Y14.13%
OCF growth 1Y39.29%
OCF growth 3Y15.6%
OCF growth 5Y17.83%