MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
521.72 USD
+1.18 (+0.23%)
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 285 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 valied quite expensively at the moment, while it does show a decent growth rate. MSFT also has an excellent dividend rating. This makes MSFT very considerable 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.
MSFT had positive earnings in each of the past 5 years.
In the past 5 years MSFT always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 16.45%, MSFT belongs to the top of the industry, outperforming 91.58% of the companies in the same industry.
MSFT has a better Return On Equity (29.65%) than 91.58% of its industry peers.
MSFT has a better Return On Invested Capital (22.08%) than 94.04% 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 11.90%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.45% | ||
| ROE | 29.65% | ||
| ROIC | 22.08% |
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
With an excellent Profit Margin value of 36.15%, MSFT belongs to the best of the industry, outperforming 92.63% of the companies in the same industry.
MSFT's Profit Margin has improved in the last couple of years.
MSFT's Operating Margin of 45.62% is amongst the best of the industry. MSFT outperforms 96.84% of its industry peers.
MSFT's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 68.82%, MSFT perfoms like the industry average, outperforming 50.88% 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 | 45.62% | ||
| PM (TTM) | 36.15% | ||
| GM | 68.82% |
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.
Compared to 1 year ago, MSFT has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 10.20 indicates that MSFT is not in any danger for bankruptcy at the moment.
MSFT has a better Altman-Z score (10.20) than 86.32% 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.
With a decent Debt to FCF ratio value of 1.25, MSFT is doing good in the industry, outperforming 73.68% of the companies in the same industry.
A Debt/Equity ratio of 0.24 indicates that MSFT is not too dependend on debt financing.
MSFT has a Debt to Equity ratio (0.24) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.2 |
ROIC/WACC2.02
WACC10.92%
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 comparable to the rest of the industry.
A Quick Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Quick ratio (1.35) which is in line with its industry peers.
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 | 1.35 | ||
| Quick Ratio | 1.35 |
3. Growth
3.1 Past
MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.50%, which is quite good.
The Earnings Per Share has been growing by 18.86% on average over the past years. This is quite good.
The Revenue has grown by 14.93% in the past year. This is quite good.
The Revenue has been growing by 14.52% on average over the past years. This is quite good.
EPS 1Y (TTM)15.5%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%23.73%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
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 15.23% 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 12.67% on average per year.
EPS Next Y15.9%
EPS Next 2Y16.5%
EPS Next 3Y17.55%
EPS Next 5Y15.23%
Revenue Next Year15.55%
Revenue Next 2Y15.01%
Revenue Next 3Y15.13%
Revenue Next 5Y12.67%
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
With a Price/Earnings ratio of 38.25, MSFT can be considered very expensive at the moment.
61.75% of the companies in the same industry are more expensive than MSFT, based on the Price/Earnings ratio.
MSFT is valuated rather expensively when we compare the Price/Earnings ratio to 27.57, which is the current average of the S&P500 Index.
MSFT is valuated quite expensively with a Price/Forward Earnings ratio of 33.00.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 61.05% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 23.09. MSFT is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 38.25 | ||
| Fwd PE | 33 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MSFT is valued a bit cheaper than the industry average as 78.60% of the companies are valued more expensively.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MSFT is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 54.15 | ||
| EV/EBITDA | 23.36 |
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.
MSFT's earnings are expected to grow with 17.55% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.41
PEG (5Y)2.03
EPS Next 2Y16.5%
EPS Next 3Y17.55%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.71%, which is pretty low.
Compared to an average industry Dividend Yield of 36.72, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.58% of the companies listed in the same industry.
With a Dividend Yield of 0.71, MSFT pays less dividend than the S&P500 average, which is at 2.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.71% |
5.2 History
On average, the dividend of MSFT grows each year by 10.24%, which is quite nice.
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)10.24%
Div Incr Years20
Div Non Decr Years20
5.3 Sustainability
MSFT pays out 23.65% of its income as dividend. This is a sustainable payout ratio.
The dividend of MSFT is growing, but earnings are growing more, so the dividend growth is sustainable.
DP23.65%
EPS Next 2Y16.5%
EPS Next 3Y17.55%
NASDAQ:MSFT (10/23/2025, 9:58:09 AM)
521.72
+1.18 (+0.23%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.31%
Inst Owner Change-1.6%
Ins Owners0.03%
Ins Owner Change0.02%
Market Cap3878.03B
Revenue(TTM)281.72B
Net Income(TTM)101.83B
Analysts85.71
Price Target618.12 (18.48%)
Short Float %0.88%
Short Ratio3.11
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.71% |
Yearly Dividend3.24
Dividend Growth(5Y)10.24%
DP23.65%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.77%
Min EPS beat(2)5.34%
Max EPS beat(2)6.2%
EPS beat(4)4
Avg EPS beat(4)4.44%
Min EPS beat(4)1.79%
Max EPS beat(4)6.2%
EPS beat(8)7
Avg EPS beat(8)4.04%
EPS beat(12)10
Avg EPS beat(12)3.55%
EPS beat(16)12
Avg EPS beat(16)3.12%
Revenue beat(2)2
Avg Revenue beat(2)0.97%
Min Revenue beat(2)0.4%
Max Revenue beat(2)1.54%
Revenue beat(4)2
Avg Revenue beat(4)0.21%
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)4
Avg Revenue beat(12)-0.18%
Revenue beat(16)5
Avg Revenue beat(16)-0.36%
PT rev (1m)0.29%
PT rev (3m)18.12%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)2.85%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)2.7%
Revenue NQ rev (1m)-0.2%
Revenue NQ rev (3m)1.69%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)1.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 38.25 | ||
| Fwd PE | 33 | ||
| P/S | 13.77 | ||
| P/FCF | 54.15 | ||
| P/OCF | 28.48 | ||
| P/B | 11.29 | ||
| P/tB | 19.26 | ||
| EV/EBITDA | 23.36 |
EPS(TTM)13.64
EY2.61%
EPS(NY)15.81
Fwd EY3.03%
FCF(TTM)9.63
FCFY1.85%
OCF(TTM)18.32
OCFY3.51%
SpS37.9
BVpS46.21
TBVpS27.09
PEG (NY)2.41
PEG (5Y)2.03
Graham Number119.09
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 16.45% | ||
| ROE | 29.65% | ||
| ROCE | 26.9% | ||
| ROIC | 22.08% | ||
| ROICexc | 27.53% | ||
| ROICexgc | 43.75% | ||
| OM | 45.62% | ||
| PM (TTM) | 36.15% | ||
| GM | 68.82% | ||
| FCFM | 25.42% |
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-Score5
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Debt/EBITDA | 0.51 | ||
| Cap/Depr | 189.01% | ||
| Cap/Sales | 22.91% | ||
| Interest Coverage | 80.33 | ||
| Cash Conversion | 83.7% | ||
| Profit Quality | 70.32% | ||
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.35 | ||
| Altman-Z | 10.2 |
F-Score5
WACC10.92%
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)15.5%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%23.73%
EPS Next Y15.9%
EPS Next 2Y16.5%
EPS Next 3Y17.55%
EPS Next 5Y15.23%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
Revenue Next Year15.55%
Revenue Next 2Y15.01%
Revenue Next 3Y15.13%
Revenue Next 5Y12.67%
EBIT growth 1Y17.45%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year51.87%
EBIT Next 3Y27.27%
EBIT Next 5Y25.57%
FCF growth 1Y-3.32%
FCF growth 3Y3.2%
FCF growth 5Y9.62%
OCF growth 1Y14.86%
OCF growth 3Y15.21%
OCF growth 5Y17.55%