MICROSOFT CORP (MSFT) Stock Fundamental Analysis
USA - NASDAQ:MSFT - US5949181045 - Common Stock
500.23 USD
-3.06 (-0.61%)
MSFT gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 281 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 not valued too expensively and it also shows a decent growth rate. Finally MSFT also has an excellent dividend rating. These ratings could make MSFT a good candidate for dividend 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.
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
MSFT has a Return On Assets of 16.49%. This is amongst the best in the industry. MSFT outperforms 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.
Looking at the Return On Invested Capital, with a value of 22.25%, MSFT belongs to the top of the industry, outperforming 94.31% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for MSFT is significantly above the industry average of 11.92%.
| 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
MSFT has a better Profit Margin (35.71%) than 92.53% of its industry peers.
MSFT's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 46.27%, MSFT belongs to the top of the industry, outperforming 96.80% of the companies in the same industry.
MSFT's Operating Margin has improved in the last couple of years.
MSFT has a Gross Margin of 68.76%. This is comparable to the rest of the industry: MSFT outperforms 50.53% 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 | 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.
The number of shares outstanding for MSFT remains at a similar level compared to 1 year ago.
Compared to 5 years ago, MSFT has less shares outstanding
Compared to 1 year ago, MSFT has an improved debt to assets ratio.
2.2 Solvency
MSFT has an Altman-Z score of 10.04. This indicates that MSFT is financially healthy and has little risk of bankruptcy at the moment.
MSFT has a Altman-Z score of 10.04. This is amongst the best in the industry. MSFT outperforms 87.90% 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.
MSFT has a better Debt to FCF ratio (1.25) than 73.67% of its industry peers.
MSFT has a Debt/Equity ratio of 0.24. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of MSFT (0.24) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.24 | ||
| Debt/FCF | 1.25 | ||
| Altman-Z | 10.04 |
ROIC/WACC2.05
WACC10.86%
2.3 Liquidity
A Current Ratio of 1.40 indicates that MSFT should not have too much problems paying its short term obligations.
MSFT has a Current ratio (1.40) which 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.
MSFT has a Quick ratio of 1.39. This is comparable to the rest of the industry: MSFT outperforms 44.84% 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 | 1.4 | ||
| 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.
The Revenue has grown by 15.59% 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 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
MSFT is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 18.83% yearly.
The Revenue is expected to grow by 14.31% on average over the next years. This is quite good.
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.
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
Based on the Price/Earnings ratio of 34.57, the valuation of MSFT can be described as expensive.
Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than the industry average as 60.85% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of MSFT to the average of the S&P500 Index (25.91), we can say MSFT is valued slightly more expensively.
A Price/Forward Earnings ratio of 26.48 indicates a quite expensive valuation of MSFT.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 64.06% of the companies listed in the same industry.
MSFT's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 34.57.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.57 | ||
| Fwd PE | 26.48 |
4.2 Price Multiples
MSFT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 77.94% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MSFT is valued a bit cheaper than 60.85% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 47.66 | ||
| EV/EBITDA | 20.84 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
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)2.04
PEG (5Y)1.83
EPS Next 2Y17.68%
EPS Next 3Y18.5%
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 41.11, 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 0.73, MSFT pays less dividend than the S&P500 average, which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
5.2 History
The dividend of MSFT is nicely growing with an annual growth rate of 10.24%!
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
MSFT pays out 23.52% 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.
DP23.52%
EPS Next 2Y17.68%
EPS Next 3Y18.5%
NASDAQ:MSFT (11/14/2025, 9:40:09 AM)
500.23
-3.06 (-0.61%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.31%
Inst Owner Change-2.09%
Ins Owners0.03%
Ins Owner Change0.02%
Market Cap3.72T
Revenue(TTM)293.81B
Net Income(TTM)104.91B
Analysts86.29
Price Target624.5 (24.84%)
Short Float %0.7%
Short Ratio2.66
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.73% |
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)6.06%
EPS NY rev (1m)0.92%
EPS NY rev (3m)3.64%
Revenue NQ rev (1m)0.35%
Revenue NQ rev (3m)1.91%
Revenue NY rev (1m)0.73%
Revenue NY rev (3m)2.54%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.57 | ||
| Fwd PE | 26.48 | ||
| P/S | 12.66 | ||
| P/FCF | 47.66 | ||
| P/OCF | 25.29 | ||
| P/B | 10.24 | ||
| P/tB | 16.72 | ||
| EV/EBITDA | 20.84 |
EPS(TTM)14.47
EY2.89%
EPS(NY)18.89
Fwd EY3.78%
FCF(TTM)10.5
FCFY2.1%
OCF(TTM)19.78
OCFY3.95%
SpS39.53
BVpS48.85
TBVpS29.91
PEG (NY)2.04
PEG (5Y)1.83
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 | 10.04 |
F-Score6
WACC10.86%
ROIC/WACC2.05
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 34.57 and the Price/Book (PB) ratio is 10.24.
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.