MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
507.49 USD
-2.69 (-0.53%)
508.138 USD
+0.65 (+0.13%)
We assign a fundamental rating of 7 out of 10 to MSFT. MSFT was compared to 281 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 decent growth rate and is not valued too expensively. MSFT also has an excellent dividend rating. This makes MSFT very considerable for dividend and quality 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.
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 (16.49%) is better than 91.81% of its industry peers.
Looking at the Return On Equity, with a value of 28.90%, MSFT belongs to the top of the industry, outperforming 91.81% of the companies in the same industry.
MSFT has a better Return On Invested Capital (22.25%) than 94.31% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MSFT is significantly above the industry average of 12.08%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.49% | ||
| ROE | 28.9% | ||
| ROIC | 22.25% |
ROA(3y)17.07%
ROA(5y)17.9%
ROE(3y)32.52%
ROE(5y)36.88%
ROIC(3y)22.94%
ROIC(5y)23.52%
1.3 Margins
Looking at the Profit Margin, with a value of 35.71%, MSFT belongs to the top of the industry, outperforming 92.53% of the companies in the same industry.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT has a better Operating Margin (46.27%) than 96.80% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 68.76%, MSFT perfoms like the industry average, outperforming 50.53% of the companies in the same industry.
MSFT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 46.27% | ||
| PM (TTM) | 35.71% | ||
| GM | 68.76% |
OM growth 3Y2.75%
OM growth 5Y4.26%
PM growth 3Y-0.49%
PM growth 5Y3.14%
GM growth 3Y0.21%
GM growth 5Y0.31%
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.
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 10.16. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of MSFT (10.16) is better than 88.26% of its industry peers.
MSFT has a debt to FCF ratio of 1.25. This is a very positive value and a sign of high solvency as it would only need 1.25 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.25, MSFT is in the better half of the industry, outperforming 73.67% of the companies in the same industry.
A Debt/Equity ratio of 0.24 indicates that MSFT is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.24, MSFT perfoms like the industry average, outperforming 45.20% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.16 |
ROIC/WACC2.02
WACC11.03%
2.3 Liquidity
MSFT has a Current Ratio of 1.40. 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 (1.40) is comparable to the rest of the industry.
A Quick Ratio of 1.39 indicates that MSFT should not have too much problems paying its short term obligations.
The Quick ratio of MSFT (1.39) 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 | 1.4 | ||
| Quick Ratio | 1.39 |
3. Growth
3.1 Past
MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 19.39%, which is quite good.
MSFT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.86% yearly.
Looking at the last year, MSFT shows a quite strong growth in Revenue. The Revenue has grown by 15.59% in the last year.
Measured over the past years, MSFT shows a quite strong growth in Revenue. The Revenue has been growing by 14.52% on average per year.
EPS 1Y (TTM)19.39%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%25.15%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
3.2 Future
The Earnings Per Share is expected to grow by 18.83% on average over the next years. This is quite good.
MSFT is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.31% yearly.
EPS Next Y16.96%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
EPS Next 5Y18.83%
Revenue Next Year16.4%
Revenue Next 2Y15.53%
Revenue Next 3Y15.9%
Revenue Next 5Y14.31%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last 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
A Price/Earnings ratio of 35.07 indicates a quite expensive valuation of MSFT.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than 61.21% 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 25.56.
With a Price/Forward Earnings ratio of 26.87, MSFT can be considered very expensive at the moment.
MSFT's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 64.06% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of MSFT to the average of the S&P500 Index (34.62), we can say MSFT is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.07 | ||
| Fwd PE | 26.87 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 77.22% of the companies listed in the same industry.
MSFT's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 60.14% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 48.35 | ||
| EV/EBITDA | 21.13 |
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.
MSFT has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as MSFT's earnings are expected to grow with 18.50% in the coming years.
PEG (NY)2.07
PEG (5Y)1.86
EPS Next 2Y17.68%
EPS Next 3Y18.5%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.72%, which is pretty low.
Compared to an average industry Dividend Yield of 42.44, MSFT pays a better dividend. On top of this MSFT pays more dividend than 90.04% of the companies listed in the same industry.
With a Dividend Yield of 0.72, MSFT pays less dividend than the S&P500 average, which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
5.2 History
On average, the dividend of MSFT grows each year by 10.24%, which is quite nice.
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)10.24%
Div Incr Years20
Div Non Decr Years20
5.3 Sustainability
23.52% 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.
DP23.52%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
507.49
-2.69 (-0.53%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.31%
Inst Owner Change1.5%
Ins Owners0.03%
Ins Owner Change4.33%
Market Cap3.77T
Revenue(TTM)293.81B
Net Income(TTM)104.91B
Analysts86.29
Price Target624.5 (23.06%)
Short Float %0.7%
Short Ratio2.66
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
Yearly Dividend3.24
Dividend Growth(5Y)10.24%
DP23.52%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.33%
Min EPS beat(2)6.2%
Max EPS beat(2)10.46%
EPS beat(4)4
Avg EPS beat(4)5.95%
Min EPS beat(4)1.79%
Max EPS beat(4)10.46%
EPS beat(8)7
Avg EPS beat(8)4.04%
EPS beat(12)10
Avg EPS beat(12)4.42%
EPS beat(16)12
Avg EPS beat(16)3.32%
Revenue beat(2)2
Avg Revenue beat(2)1.31%
Min Revenue beat(2)1.09%
Max Revenue beat(2)1.54%
Revenue beat(4)3
Avg Revenue beat(4)0.57%
Min Revenue beat(4)-0.75%
Max Revenue beat(4)1.54%
Revenue beat(8)3
Avg Revenue beat(8)-0.03%
Revenue beat(12)5
Avg Revenue beat(12)-0.01%
Revenue beat(16)5
Avg Revenue beat(16)-0.36%
PT rev (1m)1.03%
PT rev (3m)3.27%
EPS NQ rev (1m)4.35%
EPS NQ rev (3m)4.79%
EPS NY rev (1m)0.92%
EPS NY rev (3m)3.64%
Revenue NQ rev (1m)0.39%
Revenue NQ rev (3m)0.82%
Revenue NY rev (1m)0.73%
Revenue NY rev (3m)2.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 35.07 | ||
| Fwd PE | 26.87 | ||
| P/S | 12.84 | ||
| P/FCF | 48.35 | ||
| P/OCF | 25.65 | ||
| P/B | 10.39 | ||
| P/tB | 16.97 | ||
| EV/EBITDA | 21.13 |
EPS(TTM)14.47
EY2.85%
EPS(NY)18.89
Fwd EY3.72%
FCF(TTM)10.5
FCFY2.07%
OCF(TTM)19.78
OCFY3.9%
SpS39.53
BVpS48.85
TBVpS29.91
PEG (NY)2.07
PEG (5Y)1.86
Graham Number126.11
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.49% | ||
| ROE | 28.9% | ||
| ROCE | 27.11% | ||
| ROIC | 22.25% | ||
| ROICexc | 27.94% | ||
| ROICexgc | 43.14% | ||
| OM | 46.27% | ||
| PM (TTM) | 35.71% | ||
| GM | 68.76% | ||
| FCFM | 26.55% |
ROA(3y)17.07%
ROA(5y)17.9%
ROE(3y)32.52%
ROE(5y)36.88%
ROIC(3y)22.94%
ROIC(5y)23.52%
ROICexc(3y)31.07%
ROICexc(5y)36.94%
ROICexgc(3y)52.63%
ROICexgc(5y)67.5%
ROCE(3y)28.11%
ROCE(5y)28.75%
ROICexgc growth 3Y-18.02%
ROICexgc growth 5Y-15.78%
ROICexc growth 3Y-12.77%
ROICexc growth 5Y-10.15%
OM growth 3Y2.75%
OM growth 5Y4.26%
PM growth 3Y-0.49%
PM growth 5Y3.14%
GM growth 3Y0.21%
GM growth 5Y0.31%
F-Score6
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Debt/EBITDA | 0.49 | ||
| Cap/Depr | 173.29% | ||
| Cap/Sales | 23.49% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 83.66% | ||
| Profit Quality | 74.36% | ||
| Current Ratio | 1.4 | ||
| Quick Ratio | 1.39 | ||
| Altman-Z | 10.16 |
F-Score6
WACC11.03%
ROIC/WACC2.02
Cap/Depr(3y)197.12%
Cap/Depr(5y)186.6%
Cap/Sales(3y)18.11%
Cap/Sales(5y)15.73%
Profit Quality(3y)78.85%
Profit Quality(5y)83.54%
High Growth Momentum
Growth
EPS 1Y (TTM)19.39%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%25.15%
EPS Next Y16.96%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
EPS Next 5Y18.83%
Revenue 1Y (TTM)15.59%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.43%
Revenue Next Year16.4%
Revenue Next 2Y15.53%
Revenue Next 3Y15.9%
Revenue Next 5Y14.31%
EBIT growth 1Y20.2%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year51.87%
EBIT Next 3Y28.86%
EBIT Next 5Y23.22%
FCF growth 1Y23.39%
FCF growth 3Y3.2%
FCF growth 5Y9.62%
OCF growth 1Y54.83%
OCF growth 3Y15.21%
OCF growth 5Y17.55%
MICROSOFT CORP / MSFT FAQ
Can you provide the ChartMill fundamental rating for MICROSOFT CORP?
ChartMill assigns a fundamental rating of 7 / 10 to MSFT.
What is the valuation status for MSFT stock?
ChartMill assigns a valuation rating of 4 / 10 to MICROSOFT CORP (MSFT). This can be considered as Fairly Valued.
Can you provide the profitability details for MICROSOFT CORP?
MICROSOFT CORP (MSFT) has a profitability rating of 8 / 10.
What are the PE and PB ratios of MICROSOFT CORP (MSFT) stock?
The Price/Earnings (PE) ratio for MICROSOFT CORP (MSFT) is 35.07 and the Price/Book (PB) ratio is 10.39.
What is the earnings growth outlook for MICROSOFT CORP?
The Earnings per Share (EPS) of MICROSOFT CORP (MSFT) is expected to grow by 16.96% in the next year.