MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
513.52 USD
+5.07 (+1%)
Overall MSFT gets a fundamental rating of 7 out of 10. We evaluated MSFT against 280 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. While showing a medium growth rate, MSFT is valued expensive at the moment. Finally 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.
In the past year MSFT had a positive cash flow from operations.
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 (16.45%) is better than 92.14% of its industry peers.
MSFT has a better Return On Equity (29.65%) than 92.14% of its industry peers.
MSFT has a Return On Invested Capital of 22.08%. This is amongst the best in the industry. MSFT outperforms 94.29% of its industry peers.
MSFT had an Average Return On Invested Capital over the past 3 years of 22.94%. This is significantly above the industry average of 11.76%.
| 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
MSFT's Profit Margin of 36.15% is amongst the best of the industry. MSFT outperforms 92.86% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
With an excellent Operating Margin value of 45.62%, MSFT belongs to the best of the industry, outperforming 96.79% of the companies in the same industry.
MSFT's Operating Margin has improved in the last couple of years.
MSFT's Gross Margin of 68.82% is in line compared to the rest of the industry. MSFT outperforms 50.00% of 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 | 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), 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.
Compared to 1 year ago, MSFT has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 10.01 indicates that MSFT is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 10.01, MSFT belongs to the best of the industry, outperforming 85.00% of the companies in the same industry.
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 73.21% of its industry peers.
A Debt/Equity ratio of 0.24 indicates that MSFT is not too dependend on debt financing.
MSFT has a Debt to Equity ratio of 0.24. This is comparable to the rest of the industry: MSFT outperforms 43.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.01 |
ROIC/WACC2.02
WACC10.95%
2.3 Liquidity
A Current Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
With a Current ratio value of 1.35, MSFT perfoms like the industry average, outperforming 43.57% of the companies in the same industry.
A Quick Ratio of 1.35 indicates that MSFT should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.35, MSFT is in line with its industry, outperforming 43.93% of the companies in the same industry.
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 | 1.35 | ||
| 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.
MSFT shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.86% yearly.
MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.93%.
MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.52% yearly.
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
The Earnings Per Share is expected to grow by 15.23% 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 11.89% yearly.
EPS Next Y15.95%
EPS Next 2Y16.49%
EPS Next 3Y17.54%
EPS Next 5Y15.23%
Revenue Next Year15.52%
Revenue Next 2Y14.96%
Revenue Next 3Y14.93%
Revenue Next 5Y11.89%
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.
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 37.65 indicates a quite expensive valuation of MSFT.
Compared to the rest of the industry, the Price/Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 61.79% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of MSFT to the average of the S&P500 Index (27.41), we can say MSFT is valued slightly more expensively.
A Price/Forward Earnings ratio of 32.47 indicates a quite expensive valuation of MSFT.
MSFT's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 62.50% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.88, MSFT is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.65 | ||
| Fwd PE | 32.47 |
4.2 Price Multiples
MSFT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 77.86% of the companies in the same industry.
MSFT's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 53.3 | ||
| EV/EBITDA | 22.8 |
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 17.54% in the coming years.
PEG (NY)2.36
PEG (5Y)2
EPS Next 2Y16.49%
EPS Next 3Y17.54%
5. Dividend
5.1 Amount
With a yearly dividend of 0.66%, MSFT is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 40.27, MSFT pays a better dividend. On top of this MSFT pays more dividend than 91.43% of the companies listed in the same industry.
With a Dividend Yield of 0.66, MSFT pays less dividend than the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.24%!
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
23.65% 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.
DP23.65%
EPS Next 2Y16.49%
EPS Next 3Y17.54%
NASDAQ:MSFT (9/19/2025, 9:49:10 AM)
513.52
+5.07 (+1%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.49%
Inst Owner Change12.46%
Ins Owners0.03%
Ins Owner Change0%
Market Cap3817.08B
Analysts85.71
Price Target616.37 (20.03%)
Short Float %0.79%
Short Ratio2.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
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)1.93%
PT rev (3m)19.36%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)3.37%
EPS NY rev (1m)2.74%
EPS NY rev (3m)2.81%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.31%
Revenue NY rev (1m)1.77%
Revenue NY rev (3m)1.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.65 | ||
| Fwd PE | 32.47 | ||
| P/S | 13.55 | ||
| P/FCF | 53.3 | ||
| P/OCF | 28.03 | ||
| P/B | 11.11 | ||
| P/tB | 18.96 | ||
| EV/EBITDA | 22.8 |
EPS(TTM)13.64
EY2.66%
EPS(NY)15.81
Fwd EY3.08%
FCF(TTM)9.63
FCFY1.88%
OCF(TTM)18.32
OCFY3.57%
SpS37.9
BVpS46.21
TBVpS27.09
PEG (NY)2.36
PEG (5Y)2
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%
ROICexcg growth 3Y-18.02%
ROICexcg 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 | 10.01 |
F-Score5
WACC10.95%
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 Y15.95%
EPS Next 2Y16.49%
EPS Next 3Y17.54%
EPS Next 5Y15.23%
Revenue 1Y (TTM)14.93%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%18.1%
Revenue Next Year15.52%
Revenue Next 2Y14.96%
Revenue Next 3Y14.93%
Revenue Next 5Y11.89%
EBIT growth 1Y17.45%
EBIT growth 3Y15.52%
EBIT growth 5Y19.4%
EBIT Next Year49.13%
EBIT Next 3Y27.09%
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%