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 gets an excellent profitability rating and is at the same time showing great financial health properties. MSFT is growing strongly while it is still valued neutral. This is a good combination! MSFT also has an excellent dividend rating. With these ratings, MSFT could be worth investigating further for dividend and growth and quality investing!.
1. Profitability
1.1 Basic Checks
MSFT had positive earnings in the past year.
In the past year MSFT had a positive cash flow from operations.
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 96.38% of its industry peers.
MSFT has a Return On Equity of 34.04%. This is amongst the best in the industry. MSFT outperforms 94.93% of its industry peers.
The Return On Invested Capital of MSFT (22.99%) is better than 97.83% of its industry peers.
MSFT had an Average Return On Invested Capital over the past 3 years of 24.79%. This is significantly above the industry average of 10.18%.
| 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
Looking at the Profit Margin, with a value of 36.43%, MSFT belongs to the top of the industry, outperforming 96.74% of the companies in the same industry.
MSFT's Profit Margin has improved in the last couple of years.
MSFT's Operating Margin of 44.70% is amongst the best of the industry. MSFT outperforms 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MSFT is creating value.
Compared to 1 year ago, MSFT has less shares outstanding
MSFT has less shares outstanding than it did 5 years ago.
MSFT has a better debt/assets ratio than last year.
2.2 Solvency
MSFT has an Altman-Z score of 9.72. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of MSFT (9.72) is better than 86.96% of its industry peers.
The Debt to FCF ratio of MSFT is 1.25, which is an excellent value as it means it would take MSFT, only 1.25 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of MSFT (1.25) is better than 73.91% 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.
Looking at the Debt to Equity ratio, with a value of 0.33, MSFT is in line with its industry, outperforming 40.94% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.33 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 9.72 |
ROIC/WACC2.33
WACC9.88%
2.3 Liquidity
MSFT has a Current Ratio of 1.24. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of MSFT (1.24) is worse than 64.49% of its industry peers.
MSFT has a Quick Ratio of 1.23. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
MSFT's Quick ratio of 1.23 is on the low side compared to the rest of the industry. MSFT is outperformed by 63.41% of its industry peers.
The current and quick ratio evaluation for MSFT is rather negative, while it does have 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.
Measured over the past years, MSFT shows a very strong growth in Earnings Per Share. The EPS has been growing by 20.38% on average per year.
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.
Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 14.25% on average per year.
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 36.07 indicates a quite expensive valuation of MSFT.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 71.01% of the companies in the same industry.
MSFT's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 28.56.
MSFT is valuated quite expensively with a Price/Forward Earnings ratio of 30.55.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 68.48% of the companies listed in the same industry.
MSFT is valuated expensively when we compare the Price/Forward Earnings ratio to 20.34, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 36.07 | ||
| Fwd PE | 30.55 |
4.2 Price Multiples
MSFT's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. MSFT is cheaper than 82.25% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MSFT is valued a bit cheaper than the industry average as 64.13% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 43.87 | ||
| EV/EBITDA | 23.91 |
4.3 Compensation for Growth
MSFT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct 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 17.93% in the coming years.
PEG (NY)1.71
PEG (5Y)1.77
EPS Next 2Y17.89%
EPS Next 3Y17.93%
5. Dividend
5.1 Amount
With a yearly dividend of 0.73%, MSFT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 12.72, MSFT pays a better dividend. On top of this MSFT pays more dividend than 92.03% of the companies listed in the same industry.
With a Dividend Yield of 0.73, MSFT pays less dividend than the S&P500 average, which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.00%!
MSFT has paid a dividend for at least 10 years, which is 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%
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 (5/14/2024, 7:00:02 PM)
After market: 416.7 +0.14 (+0.03%)416.56
+2.84 (+0.69%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners72.21%
Inst Owner Change-0.06%
Ins Owners5.99%
Ins Owner Change-0.04%
Market Cap3096.00B
Analysts86.67
Price Target481.63 (15.62%)
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
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)2.84%
PT rev (3m)13.36%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)2.4%
EPS NY rev (1m)0%
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 | 36.07 | ||
| Fwd PE | 30.55 | ||
| P/S | 13.09 | ||
| P/FCF | 43.87 | ||
| P/OCF | 28.11 | ||
| P/B | 12.23 | ||
| P/tB | 29.44 | ||
| EV/EBITDA | 23.91 |
EPS(TTM)11.55
EY2.77%
EPS(NY)13.63
Fwd EY3.27%
FCF(TTM)9.5
FCFY2.28%
OCF(TTM)14.82
OCFY3.56%
SpS31.83
BVpS34.06
TBVpS14.15
PEG (NY)1.71
PEG (5Y)1.77
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
WACC9.88%
ROIC/WACC2.33
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%