MICROSOFT CORP (MSFT)
US5949181045 - Common Stock
We assign a fundamental rating of 7 out of 10 to MSFT. MSFT was compared to 279 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 has a correct valuation and a medium growth rate. MSFT also has an excellent dividend rating. These ratings would make MSFT suitable 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.
In the past 5 years MSFT always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 17.31%, MSFT belongs to the best of the industry, outperforming 94.62% of the companies in the same industry.
MSFT has a better Return On Equity (31.46%) than 92.47% of its industry peers.
MSFT has a Return On Invested Capital of 22.57%. This is amongst the best in the industry. MSFT outperforms 95.34% of its industry peers.
MSFT had an Average Return On Invested Capital over the past 3 years of 23.84%. This is significantly above the industry average of 11.54%.
| 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
The Profit Margin of MSFT (35.61%) is better than 96.77% of its industry peers.
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 100.00% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
Looking at the Gross Margin, with a value of 69.35%, MSFT is in line with its industry, outperforming 52.69% 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so MSFT 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.
The debt/assets ratio for MSFT has been reduced compared to a year ago.
2.2 Solvency
MSFT has an Altman-Z score of 9.66. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 9.66, MSFT is doing good in the industry, outperforming 79.57% 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 74.19% of the companies in the same industry.
MSFT has a Debt/Equity ratio of 0.25. This is a healthy value indicating a solid balance between debt and equity.
MSFT's Debt to Equity ratio of 0.25 is in line compared to the rest of the industry. MSFT outperforms 40.14% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.05 | ||
| Altman-Z | 9.66 |
ROIC/WACC1.92
WACC11.77%
2.3 Liquidity
MSFT has a Current Ratio of 1.30. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.30, MSFT is doing worse than 60.57% of the companies in the same industry.
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
MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.98%, which is quite good.
Measured over the past years, MSFT shows a quite strong growth in Earnings Per Share. The EPS has been growing by 19.98% on average per year.
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
MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.16% yearly.
The Revenue is expected to grow by 12.35% on average over the next years. This is quite good.
EPS Next Y12.45%
EPS Next 2Y13.64%
EPS Next 3Y15.08%
EPS Next 5Y14.16%
Revenue Next Year13.65%
Revenue Next 2Y13.88%
Revenue Next 3Y14.09%
Revenue Next 5Y12.35%
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.
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 34.28, which means the current valuation is very expensive for MSFT.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 70.61% of the companies in the same industry.
MSFT is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.65, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 27.24, which means the current valuation is very expensive for MSFT.
MSFT's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 70.61% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.56. MSFT is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.28 | ||
| Fwd PE | 27.24 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued cheaper than 80.65% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MSFT is valued a bit cheaper than 66.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.51 | ||
| EV/EBITDA | 21.82 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of MSFT may justify a higher PE ratio.
MSFT's earnings are expected to grow with 15.08% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.75
PEG (5Y)1.72
EPS Next 2Y13.64%
EPS Next 3Y15.08%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.78%, which is pretty low.
MSFT's Dividend Yield is rather good when compared to the industry average which is at 11.80. MSFT pays more dividend than 92.47% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.23, MSFT's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.78% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.19%!
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)10.19%
Div Incr Years19
Div Non Decr Years19
5.3 Sustainability
MSFT pays out 24.63% of its income as dividend. This is a sustainable payout ratio.
MSFT's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP24.63%
EPS Next 2Y13.64%
EPS Next 3Y15.08%
MICROSOFT CORP
NASDAQ:MSFT (11/20/2024, 8:00:00 PM)
Premarket: 414.98 -0.51 (-0.12%)415.49
-2.3 (-0.55%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners79.44%
Inst Owner Change11.28%
Ins Owners5.98%
Ins Owner Change0.02%
Market Cap3089.12B
Analysts85.31
Price Target505.89 (21.76%)
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.78% |
Dividend Growth(5Y)10.19%
DP24.63%
Div Incr Years19
Div Non Decr Years19
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)-0.08%
PT rev (3m)-0.39%
EPS NQ rev (1m)-4.99%
EPS NQ rev (3m)-4.99%
EPS NY rev (1m)-0.42%
EPS NY rev (3m)-2.1%
Revenue NQ rev (1m)-1.38%
Revenue NQ rev (3m)-1.38%
Revenue NY rev (1m)-0.22%
Revenue NY rev (3m)-0.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.28 | ||
| Fwd PE | 27.24 | ||
| P/S | 12.15 | ||
| P/FCF | 42.51 | ||
| P/OCF | 25.29 | ||
| P/B | 10.74 | ||
| P/tB | 21.82 | ||
| EV/EBITDA | 21.82 |
EPS(TTM)12.12
EY2.92%
EPS(NY)15.25
Fwd EY3.67%
FCF(TTM)9.77
FCFY2.35%
OCF(TTM)16.43
OCFY3.95%
SpS34.19
BVpS38.7
TBVpS19.05
PEG (NY)2.75
PEG (5Y)1.72
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 | 9.66 |
F-Score5
WACC11.77%
ROIC/WACC1.92
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 Y12.45%
EPS Next 2Y13.64%
EPS Next 3Y15.08%
EPS Next 5Y14.16%
Revenue 1Y (TTM)16.44%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%16.04%
Revenue Next Year13.65%
Revenue Next 2Y13.88%
Revenue Next 3Y14.09%
Revenue Next 5Y12.35%
EBIT growth 1Y18.95%
EBIT growth 3Y16.11%
EBIT growth 5Y20.56%
EBIT Next Year35.63%
EBIT Next 3Y22.45%
EBIT Next 5Y18.51%
FCF growth 1Y14.73%
FCF growth 3Y9.69%
FCF growth 5Y14.13%
OCF growth 1Y39.29%
OCF growth 3Y15.6%
OCF growth 5Y17.83%