Microsoft Corporation

NEOE:MSFT Stock Report

Market Cap: CA$4.3t

Microsoft Valuation

Is MSFT undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of MSFT when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MSFT (CA$30.4) is trading below our estimate of fair value (CA$38.2)

Significantly Below Fair Value: MSFT is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MSFT?

Key metric: As MSFT is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for MSFT. This is calculated by dividing MSFT's market cap by their current earnings.
What is MSFT's PE Ratio?
PE Ratio34.1x
EarningsUS$90.51b
Market CapUS$3.09t

Price to Earnings Ratio vs Peers

How does MSFT's PE Ratio compare to its peers?

The above table shows the PE ratio for MSFT vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average84.2x
CSU Constellation Software
114x26.8%CA$93.7b
ORCL Oracle
46.9x16.5%US$509.2b
NOW ServiceNow
155.3x21.7%US$208.7b
GIB.A CGI
20.5x7.2%CA$34.6b
MSFT Microsoft
34.2x12.6%CA$3.1t

Price-To-Earnings vs Peers: MSFT is good value based on its Price-To-Earnings Ratio (34.2x) compared to the peer average (84.2x).

Price to Earnings Ratio vs Industry

How does MSFT's PE Ratio compare vs other companies in the CA Software Industry?

8 CompaniesPrice / EarningsEstimated GrowthMarket Cap
GRDI Griid Infrastructure
3.3xn/aUS$70.78m
IDLE.X Generative AI Solutions
0.08xn/aUS$8.15m
LIQD Liquid Meta Capital Holdings
2.4xn/aUS$2.74m
SPAI Sparc Al
1xn/aUS$2.50m
MSFT 34.1xIndustry Avg. 38.8xNo. of Companies8PE020406080100+
8 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: MSFT is good value based on its Price-To-Earnings Ratio (34.2x) compared to the Canadian Software industry average (38.8x).

Price to Earnings Ratio vs Fair Ratio

What is MSFT's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MSFT PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio34.1x
Fair PE Ratio108.3x

Price-To-Earnings vs Fair Ratio: MSFT is good value based on its Price-To-Earnings Ratio (34.2x) compared to the estimated Fair Price-To-Earnings Ratio (108.3x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.

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