430.29 USD
-3.21 (-0.74%)
At close: Jan 30, 2026
428.77 USD
-1.52 (-0.35%)
After Hours: 1/30/2026, 8:07:25 PM
Taking everything into account, MSFT scores 7 out of 10 in our fundamental rating. MSFT was compared to 278 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 priced too expensively while it is growing strongly. Keep and eye on this one! MSFT also has an excellent dividend rating. These ratings would make MSFT suitable for dividend and growth 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
- With an excellent Return On Assets value of 17.93%, MSFT belongs to the best of the industry, outperforming 93.88% of the companies in the same industry.
- MSFT has a better Return On Equity (30.51%) than 92.09% of its industry peers.
- MSFT's Return On Invested Capital of 21.86% is amongst the best of the industry. MSFT outperforms 94.96% 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 10.73%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.93% | ||
| ROE | 30.51% | ||
| ROIC | 21.86% |
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 39.04% is amongst the best of the industry. MSFT outperforms 92.81% of its industry peers.
- In the last couple of years the Profit Margin of MSFT has grown nicely.
- MSFT's Operating Margin of 46.67% is amongst the best of the industry. MSFT outperforms 96.76% of its industry peers.
- In the last couple of years the Operating Margin of MSFT has grown nicely.
- MSFT has a Gross Margin (68.59%) which is comparable to the rest of the industry.
- MSFT's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 46.67% | ||
| PM (TTM) | 39.04% | ||
| GM | 68.59% |
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.
- Compared to 1 year ago, MSFT has about the same amount of shares outstanding.
- 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
- An Altman-Z score of 8.84 indicates that MSFT is not in any danger for bankruptcy at the moment.
- MSFT has a better Altman-Z score (8.84) than 89.21% of its industry peers.
- The Debt to FCF ratio of MSFT is 1.30, which is an excellent value as it means it would take MSFT, only 1.30 years of fcf income to pay off all of its debts.
- The Debt to FCF ratio of MSFT (1.30) is better than 72.30% of its industry peers.
- MSFT has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
- MSFT has a Debt to Equity ratio (0.23) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.3 | ||
| Altman-Z | 8.84 |
ROIC/WACC1.99
WACC10.98%
2.3 Liquidity
- A Current Ratio of 1.39 indicates that MSFT should not have too much problems paying its short term obligations.
- With a Current ratio value of 1.39, MSFT perfoms like the industry average, outperforming 43.17% of the companies in the same industry.
- MSFT has a Quick Ratio of 1.38. 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 Quick ratio, with a value of 1.38, MSFT is in line with its industry, outperforming 42.81% 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 | 1.39 | ||
| Quick Ratio | 1.38 |
3. Growth
3.1 Past
- MSFT shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 23.83%, which is quite impressive.
- Measured over the past years, MSFT shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.86% on average per year.
- The Revenue has grown by 16.67% 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)23.83%
EPS 3Y14.03%
EPS 5Y18.86%
EPS Q2Q%28.17%
Revenue 1Y (TTM)16.67%
Revenue growth 3Y12.42%
Revenue growth 5Y14.52%
Sales Q2Q%16.72%
3.2 Future
- The Earnings Per Share is expected to grow by 18.83% on average over the next years. This is quite good.
- Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 15.04% on average per year.
EPS Next Y22.79%
EPS Next 2Y18.47%
EPS Next 3Y18.31%
EPS Next 5Y18.83%
Revenue Next Year17.06%
Revenue Next 2Y15.95%
Revenue Next 3Y16.12%
Revenue Next 5Y15.04%
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
- The Price/Earnings ratio is 27.98, which means the current valuation is very expensive for MSFT.
- Based on the Price/Earnings ratio, MSFT is valued a bit cheaper than the industry average as 61.51% of the companies are valued more expensively.
- Compared to an average S&P500 Price/Earnings ratio of 28.32, MSFT is valued at the same level.
- A Price/Forward Earnings ratio of 22.48 indicates a rather expensive valuation of MSFT.
- Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than 65.47% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, MSFT is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.98 | ||
| Fwd PE | 22.48 |
4.2 Price Multiples
- MSFT's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. MSFT is cheaper than 78.06% of the companies in the same industry.
- MSFT's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 41.31 | ||
| EV/EBITDA | 17.48 |
4.3 Compensation for Growth
- MSFT's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- 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 18.31% in the coming years.
PEG (NY)1.23
PEG (5Y)1.48
EPS Next 2Y18.47%
EPS Next 3Y18.31%
5. Dividend
5.1 Amount
- MSFT has a yearly dividend return of 0.84%, which is pretty low.
- MSFT's Dividend Yield is rather good when compared to the industry average which is at 0.56. MSFT pays more dividend than 90.65% of the companies in the same industry.
- With a Dividend Yield of 0.84, MSFT pays less dividend than the S&P500 average, which is at 1.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
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
- MSFT pays out 21.19% 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.
DP21.19%
EPS Next 2Y18.47%
EPS Next 3Y18.31%
MICROSOFT CORP / MSFT FAQ
Can you provide the ChartMill fundamental rating for MICROSOFT CORP?
ChartMill assigns a fundamental rating of 7 / 10 to MSFT.
Can you provide the valuation status for MICROSOFT CORP?
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 is the financial health of MICROSOFT CORP (MSFT) stock?
The financial health rating of MICROSOFT CORP (MSFT) is 8 / 10.
What is the expected EPS growth for MICROSOFT CORP (MSFT) stock?
The Earnings per Share (EPS) of MICROSOFT CORP (MSFT) is expected to grow by 22.79% in the next year.