MICROSOFT CORP (MSFT)
US5949181045 - Common Stock
Overall MSFT gets a fundamental rating of 7 out of 10. We evaluated MSFT against 278 industry peers in the Software industry. MSFT scores excellent points on both the profitability and health parts. This is a solid base for a good stock. MSFT is not valued too expensively and it also shows a decent growth rate. 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.
MSFT had a positive operating cash flow in the past year.
In the past 5 years MSFT has always been profitable.
MSFT had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 17.31%, MSFT belongs to the top of the industry, outperforming 93.88% of the companies in the same industry.
MSFT has a better Return On Equity (31.46%) than 91.73% of its industry peers.
With an excellent Return On Invested Capital value of 22.57%, MSFT belongs to the best of the industry, outperforming 94.60% of the companies in the same industry.
MSFT had an Average Return On Invested Capital over the past 3 years of 23.84%. This is significantly above the industry average of 12.33%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.31% | ||
| ROE | 31.46% | ||
| ROIC | 22.57% |
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
1.3 Margins
MSFT has a better Profit Margin (35.61%) than 96.40% of its industry peers.
In the last couple of years the Profit Margin of MSFT has grown nicely.
MSFT has a Operating Margin of 44.49%. This is amongst the best in the industry. MSFT outperforms 99.28% of its industry peers.
In the last couple of years the Operating Margin of MSFT has grown nicely.
With a Gross Margin value of 69.35%, MSFT perfoms like the industry average, outperforming 52.88% 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 | 44.49% | ||
| PM (TTM) | 35.61% | ||
| GM | 69.35% |
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
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.
MSFT has less shares outstanding than it did 5 years ago.
MSFT has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 10.30 indicates that MSFT is not in any danger for bankruptcy at the moment.
MSFT has a better Altman-Z score (10.30) than 80.58% of its industry peers.
MSFT has a debt to FCF ratio of 1.05. This is a very positive value and a sign of high solvency as it would only need 1.05 years to pay back of all of its debts.
MSFT's Debt to FCF ratio of 1.05 is fine compared to the rest of the industry. MSFT outperforms 73.38% of its industry peers.
A Debt/Equity ratio of 0.25 indicates that MSFT is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.25, MSFT is in line with its industry, outperforming 40.29% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.05 | ||
| Altman-Z | 10.3 |
ROIC/WACC1.99
WACC11.36%
2.3 Liquidity
MSFT has a Current Ratio of 1.30. This is a normal value and indicates that MSFT is financially healthy and should not expect problems in meeting its short term obligations.
MSFT's Current ratio of 1.30 is on the low side compared to the rest of the industry. MSFT is outperformed by 60.43% of its industry peers.
MSFT has a Quick Ratio of 1.29. 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 Quick ratio (1.29) 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 | 1.3 | ||
| Quick Ratio | 1.29 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 15.98% over the past year.
The Earnings Per Share has been growing by 19.98% on average over the past years. This is quite good.
MSFT shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 16.44%.
MSFT shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.26% yearly.
EPS 1Y (TTM)15.98%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%10.37%
Revenue 1Y (TTM)16.44%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%16.04%
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 14.88% yearly.
Based on estimates for the next years, MSFT will show a quite strong growth in Revenue. The Revenue will grow by 13.97% on average per year.
EPS Next Y12.47%
EPS Next 2Y13.71%
EPS Next 3Y15.35%
EPS Next 5Y14.88%
Revenue Next Year13.66%
Revenue Next 2Y13.94%
Revenue Next 3Y14.46%
Revenue Next 5Y13.97%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past 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 37.05, the valuation of MSFT can be described as expensive.
69.42% 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 29.25, which is the current average of the S&P500 Index.
MSFT is valuated quite expensively with a Price/Forward Earnings ratio of 29.40.
Based on the Price/Forward Earnings ratio, MSFT is valued a bit cheaper than 70.50% of the companies in the same industry.
MSFT's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 23.78.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.05 | ||
| Fwd PE | 29.4 |
4.2 Price Multiples
80.94% of the companies in the same industry are more expensive than MSFT, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MSFT indicates a somewhat cheap valuation: MSFT is cheaper than 67.63% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 45.94 | ||
| EV/EBITDA | 23.61 |
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.
MSFT's earnings are expected to grow with 15.35% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.97
PEG (5Y)1.85
EPS Next 2Y13.71%
EPS Next 3Y15.35%
5. Dividend
5.1 Amount
MSFT has a yearly dividend return of 0.75%, which is pretty low.
Compared to an average industry Dividend Yield of 13.19, MSFT pays a better dividend. On top of this MSFT pays more dividend than 92.45% of the companies listed in the same industry.
With a Dividend Yield of 0.75, MSFT pays less dividend than the S&P500 average, which is at 2.20.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.75% |
5.2 History
On average, the dividend of MSFT grows each year by 10.19%, which is quite nice.
MSFT has paid a dividend for at least 10 years, which is a reliable track record.
MSFT has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)10.19%
Div Incr Years20
Div Non Decr Years20
5.3 Sustainability
MSFT pays out 24.63% 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.
DP24.63%
EPS Next 2Y13.71%
EPS Next 3Y15.35%
MICROSOFT CORP
NASDAQ:MSFT (12/11/2024, 8:00:01 PM)
Premarket: 448 -0.99 (-0.22%)448.99
+5.66 (+1.28%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners71.99%
Inst Owner Change0.85%
Ins Owners5.98%
Ins Owner Change0.02%
Market Cap3338.19B
Analysts85.23
Price Target507.69 (13.07%)
Short Float %0.75%
Short Ratio2.78
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.75% |
Dividend Growth(5Y)10.19%
DP24.63%
Div Incr Years20
Div Non Decr Years20
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.5%
Min EPS beat(2)-1.43%
Max EPS beat(2)4.43%
EPS beat(4)3
Avg EPS beat(4)2.14%
Min EPS beat(4)-1.43%
Max EPS beat(4)4.43%
EPS beat(8)6
Avg EPS beat(8)3.65%
EPS beat(12)8
Avg EPS beat(12)2.45%
EPS beat(16)12
Avg EPS beat(16)4.78%
Revenue beat(2)0
Avg Revenue beat(2)-0.88%
Min Revenue beat(2)-1.44%
Max Revenue beat(2)-0.32%
Revenue beat(4)0
Avg Revenue beat(4)-0.64%
Min Revenue beat(4)-1.44%
Max Revenue beat(4)-0.26%
Revenue beat(8)2
Avg Revenue beat(8)-0.29%
Revenue beat(12)2
Avg Revenue beat(12)-0.67%
Revenue beat(16)5
Avg Revenue beat(16)0.01%
PT rev (1m)0.35%
PT rev (3m)0.01%
EPS NQ rev (1m)0.06%
EPS NQ rev (3m)-4.93%
EPS NY rev (1m)0.02%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-1.36%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.23%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 37.05 | ||
| Fwd PE | 29.4 | ||
| P/S | 13.13 | ||
| P/FCF | 45.94 | ||
| P/OCF | 27.33 | ||
| P/B | 11.6 | ||
| P/tB | 23.58 | ||
| EV/EBITDA | 23.61 |
EPS(TTM)12.12
EY2.7%
EPS(NY)15.27
Fwd EY3.4%
FCF(TTM)9.77
FCFY2.18%
OCF(TTM)16.43
OCFY3.66%
SpS34.19
BVpS38.7
TBVpS19.05
PEG (NY)2.97
PEG (5Y)1.85
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 17.31% | ||
| ROE | 31.46% | ||
| ROCE | 27.73% | ||
| ROIC | 22.57% | ||
| ROICexc | 27.95% | ||
| ROICexgc | 50.23% | ||
| OM | 44.49% | ||
| PM (TTM) | 35.61% | ||
| GM | 69.35% | ||
| FCFM | 28.59% |
ROA(3y)18.24%
ROA(5y)17.55%
ROE(3y)37.2%
ROE(5y)38.43%
ROIC(3y)23.84%
ROIC(5y)22.71%
ROICexc(3y)35.43%
ROICexc(5y)40.49%
ROICexgc(3y)63.99%
ROICexgc(5y)78.75%
ROCE(3y)29.44%
ROCE(5y)28%
ROICexcg growth 3Y-19.4%
ROICexcg growth 5Y-12.98%
ROICexc growth 3Y-17.33%
ROICexc growth 5Y-7.77%
OM growth 3Y2.39%
OM growth 5Y5.51%
PM growth 3Y-0.46%
PM growth 5Y2.89%
GM growth 3Y0.4%
GM growth 5Y1.15%
F-Score5
Asset Turnover0.49
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.25 | ||
| Debt/FCF | 1.05 | ||
| Debt/EBITDA | 0.52 | ||
| Cap/Depr | 192.17% | ||
| Cap/Sales | 19.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.98% | ||
| Profit Quality | 80.28% | ||
| Current Ratio | 1.3 | ||
| Quick Ratio | 1.29 | ||
| Altman-Z | 10.3 |
F-Score5
WACC11.36%
ROIC/WACC1.99
Cap/Depr(3y)189.18%
Cap/Depr(5y)172.93%
Cap/Sales(3y)14.49%
Cap/Sales(5y)13.3%
Profit Quality(3y)85.27%
Profit Quality(5y)89.91%
High Growth Momentum
Growth
EPS 1Y (TTM)15.98%
EPS 3Y14.01%
EPS 5Y19.98%
EPS Q2Q%10.37%
EPS Next Y12.47%
EPS Next 2Y13.71%
EPS Next 3Y15.35%
EPS Next 5Y14.88%
Revenue 1Y (TTM)16.44%
Revenue growth 3Y13.4%
Revenue growth 5Y14.26%
Sales Q2Q%16.04%
Revenue Next Year13.66%
Revenue Next 2Y13.94%
Revenue Next 3Y14.46%
Revenue Next 5Y13.97%
EBIT growth 1Y18.95%
EBIT growth 3Y16.11%
EBIT growth 5Y20.56%
EBIT Next Year38.44%
EBIT Next 3Y22.73%
EBIT Next 5Y19.19%
FCF growth 1Y14.73%
FCF growth 3Y9.69%
FCF growth 5Y14.13%
OCF growth 1Y39.29%
OCF growth 3Y15.6%
OCF growth 5Y17.83%