NasdaqGS:MSFT

Stock Analysis Report

Executive Summary

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide.

Rewards

PE ratio (30.2x) is below the Software industry average (47.3x)

Earnings are forecast to grow 10.95% per year

Earnings grew by 118.4% over the past year

Pays a reliable dividend of 1.26%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Outstanding track record with adequate balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has Microsoft's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MSFT has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.3%

MSFT

1.7%

US Software

1.2%

US Market


1 Year Return

55.1%

MSFT

40.0%

US Software

24.2%

US Market

Return vs Industry: MSFT exceeded the US Software industry which returned 39.8% over the past year.

Return vs Market: MSFT exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

MSFTIndustryMarket
7 Day2.3%1.7%1.2%
30 Day6.2%6.5%3.5%
90 Day22.5%21.0%11.7%
1 Year57.4%55.1%41.2%40.0%26.9%24.2%
3 Year180.1%165.4%143.7%134.0%53.0%43.2%
5 Year295.9%255.5%201.4%179.9%75.3%56.0%

Price Volatility Vs. Market

How volatile is Microsoft's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Microsoft undervalued compared to its fair value and its price relative to the market?

31.16x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: MSFT ($162.13) is trading above our estimate of fair value ($156.06)

Significantly Below Fair Value: MSFT is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: MSFT is good value based on its PE Ratio (30.2x) compared to the Software industry average (47.3x).

PE vs Market: MSFT is poor value based on its PE Ratio (30.2x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: MSFT is poor value based on its PEG Ratio (2.8x)


Price to Book Ratio

PB vs Industry: MSFT is overvalued based on its PB Ratio (11.7x) compared to the US Software industry average (5.9x).


Next Steps

Future Growth

How is Microsoft forecast to perform in the next 1 to 3 years based on estimates from 31 analysts?

10.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MSFT's forecast earnings growth (10.9% per year) is above the savings rate (1.7%).

Earnings vs Market: MSFT's earnings (10.9% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: MSFT's earnings are forecast to grow, but not significantly.

Revenue vs Market: MSFT's revenue (10.4% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: MSFT's revenue (10.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MSFT's Return on Equity is forecast to be high in 3 years time (36.5%)


Next Steps

Past Performance

How has Microsoft performed over the past 5 years?

17.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MSFT has high quality earnings.

Growing Profit Margin: MSFT's current net profit margins (31.7%) are higher than last year (16.4%).


Past Earnings Growth Analysis

Earnings Trend: MSFT's earnings have grown by 17.4% per year over the past 5 years.

Accelerating Growth: MSFT's earnings growth over the past year (118.4%) exceeds its 5-year average (17.4% per year).

Earnings vs Industry: MSFT earnings growth over the past year (118.4%) exceeded the Software industry 20.8%.


Return on Equity

High ROE: MSFT's Return on Equity (38.7%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Microsoft's financial position?


Financial Position Analysis

Short Term Liabilities: MSFT's short term assets ($165.9B) exceed its short term liabilities ($58.1B).

Long Term Liabilities: MSFT's short term assets ($165.9B) exceed its long term liabilities ($114.8B).


Debt to Equity History and Analysis

Debt Level: MSFT's debt to equity ratio (65.5%) is considered high.

Reducing Debt: MSFT's debt to equity ratio has increased from 26.6% to 65.5% over the past 5 years.

Debt Coverage: MSFT's debt is well covered by operating cash flow (75.3%).

Interest Coverage: MSFT earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: MSFT has a low level of unsold assets or inventory.

Debt Coverage by Assets: MSFT's debt is covered by short term assets (assets are 2.4x debt).


Next Steps

Dividend

What is Microsoft's current dividend yield, its reliability and sustainability?

1.22%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Microsoft before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.2%marketbottom25%1.4%markettop25%3.7%industryaverage1.3%forecastin3Years1.3%

Current dividend yield vs market & industry

Notable Dividend: MSFT's dividend (1.26%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: MSFT's dividend (1.26%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: MSFT's dividends per share have been stable in the past 10 years.

Growing Dividend: MSFT's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35.2%), MSFT's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MSFT's dividends in 3 years are forecast to be well covered by earnings (31.7% payout ratio).


Next Steps

Management

What is the CEO of Microsoft's salary, the management and board of directors tenure and is there insider trading?

4.3yrs

Average management tenure


CEO

Satya Nadella (52yo)

5.9yrs

Tenure

US$42,910,215

Compensation

Mr. Satya Nadella is Chief Executive Officer and Director of Microsoft Corporation since February 2014. Before being named CEO in February 2014, he held leadership roles in both enterprise and consumer bus ...


CEO Compensation Analysis

Compensation vs Market: Satya's total compensation ($USD42.91M) is above average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Satya's compensation has increased by more than 20% in the past year.


Management Age and Tenure

4.3yrs

Average Tenure

57.5yo

Average Age

Experienced Management: MSFT's management team is considered experienced (4.3 years average tenure).


Board Age and Tenure

5.3yrs

Average Tenure

59yo

Average Age

Experienced Board: MSFT's board of directors are considered experienced (5.3 years average tenure).


Insider Trading

Insider Buying: MSFT insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$5,250,46209 Dec 19
Margaret Johnson
EntityIndividual
Role
Senior Key Executive
Executive Vice President of Business Development
Shares35,000
Max PriceUS$150.01
SellUS$1,445,77107 Nov 19
Christopher Capossela
EntityIndividual
Shares10,000
Max PriceUS$144.77
SellUS$722,92505 Nov 19
Christopher Capossela
EntityIndividual
Shares5,000
Max PriceUS$144.75
SellUS$1,437,29130 Oct 19
Christopher Capossela
EntityIndividual
Shares10,000
Max PriceUS$144.66
SellUS$3,489,15228 Oct 19
Jean-Philippe Courtois
EntityIndividual
Role
Chief Operating Officer
Executive VP and President of Microsoft Global Sales
Shares24,419
Max PriceUS$145.06
SellUS$1,220,21711 Sep 19
Christopher Capossela
EntityIndividual
Shares9,000
Max PriceUS$135.58
SellUS$5,409,97211 Sep 19
Kathleen Hogan
EntityIndividual
Shares40,000
Max PriceUS$135.25
SellUS$2,588,61606 Sep 19
Christopher Capossela
EntityIndividual
Shares18,500
Max PriceUS$140.10
SellUS$16,988,65705 Sep 19
Amy Hood
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares123,769
Max PriceUS$137.26
SellUS$1,649,06005 Sep 19
Jean-Philippe Courtois
EntityIndividual
Role
Chief Operating Officer
Executive VP and President of Microsoft Global Sales
Shares11,779
Max PriceUS$140.00
SellUS$1,741,93805 Sep 19
Christopher Capossela
EntityIndividual
Shares12,500
Max PriceUS$139.36
SellUS$967,05014 Aug 19
Christopher Capossela
EntityIndividual
Shares7,000
Max PriceUS$138.15
SellUS$483,00612 Aug 19
Christopher Capossela
EntityIndividual
Shares3,500
Max PriceUS$138.00
SellUS$465,54205 Aug 19
Christopher Capossela
EntityIndividual
Shares3,372
Max PriceUS$138.06
SellUS$564,21630 Jul 19
Frank Brod
EntityIndividual
Role
Chief Accounting Officer
Corporate VP of Finance & Administration and Chief Accounting Officer
Shares4,000
Max PriceUS$141.05
SellUS$2,123,65411 Jun 19
Kathleen Hogan
EntityIndividual
Shares15,947
Max PriceUS$133.17
SellUS$630,09915 May 19
Christopher Capossela
EntityIndividual
Shares5,000
Max PriceUS$126.34
SellUS$386,62007 May 19
Christopher Capossela
EntityIndividual
Shares3,000
Max PriceUS$128.87
SellUS$25,064,20902 May 19
Bradford Smith
EntityIndividual
Role
President
President & Chief Legal Officer
Shares192,300
Max PriceUS$130.34
SellUS$1,170,54311 Mar 19
Christopher Capossela
EntityIndividual
Shares10,500
Max PriceUS$112.41
SellUS$3,043,75719 Feb 19
Jean-Philippe Courtois
EntityIndividual
Role
Chief Operating Officer
Executive VP and President of Microsoft Global Sales
Shares28,147
Max PriceUS$108.14

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Frank Brod (64yo)

    Corporate VP of Finance & Administration and Chief Accounting Officer

    • Bill Gates (64yo)

      Co-Founder

      • Tenure: 39yrs
    • Jean-Philippe Courtois (58yo)

      Executive VP and President of Microsoft Global Sales

      • Tenure: 3.5yrs
      • Compensation: US$15.08m
    • Satya Nadella (52yo)

      CEO & Director

      • Tenure: 5.9yrs
      • Compensation: US$42.91m
    • Brad Smith (60yo)

      President & Chief Legal Officer

      • Tenure: 4.3yrs
      • Compensation: US$17.37m
    • Peggy Johnson (57yo)

      Executive Vice President of Business Development

      • Tenure: 5.3yrs
      • Compensation: US$10.43m
    • Amy Hood (47yo)

      Executive VP & CFO

      • Tenure: 6.7yrs
      • Compensation: US$20.23m
    • J. Scott (46yo)

      CTO & Executive VP

      • Tenure: 3yrs
    • Vikas Mehta

      Director of Investor Relations

      • Nick Coleman

        Chief Technology Officer

        • Tenure: 1.3yrs

      Board Members

      • Charlie Scharf (54yo)

        Independent Director

        • Tenure: 5.3yrs
        • Compensation: US$325.00k
      • Bill Gates (64yo)

        Co-Founder

        • Tenure: 39yrs
      • John Thompson (70yo)

        Independent Chairman

        • Tenure: 5.9yrs
        • Compensation: US$552.50k
      • John Stanton (64yo)

        Independent Director

        • Tenure: 5.5yrs
        • Compensation: US$355.00k
      • Penny Pritzker (60yo)

        Independent Director

        • Tenure: 2.2yrs
        • Compensation: US$340.00k
      • Sandi Peterson (60yo)

        Independent Director

        • Tenure: 4.1yrs
        • Compensation: US$325.00k
      • Satya Nadella (52yo)

        CEO & Director

        • Tenure: 5.9yrs
        • Compensation: US$42.91m
      • Padmasree Warrior (58yo)

        Independent Director

        • Tenure: 4.1yrs
        • Compensation: US$325.00k
      • Hugh Johnston (57yo)

        Independent Director

        • Tenure: 2.3yrs
        • Compensation: US$351.00k
      • Teri List-Stoll (56yo)

        Independent Director

        • Tenure: 5.3yrs
        • Compensation: US$355.00k

      Company Information

      Microsoft Corporation's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Microsoft Corporation
      • Ticker: MSFT
      • Exchange: NasdaqGS
      • Founded: 1975
      • Industry: Systems Software
      • Sector: Software
      • Market Cap: US$1.275t
      • Shares outstanding: 7.63b
      • Website: https://www.microsoft.com

      Number of Employees


      Location

      • Microsoft Corporation
      • One Microsoft Way
      • Redmond
      • Washington
      • 98052
      • United States

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      MSFTNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMar 1986
      US_MSFTKAS (Kazakhstan Stock Exchange)YesCommon StockKZKZTMar 1986
      MSFT *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNMar 1986
      MSFDB (Deutsche Boerse AG)YesCommon StockDEEURMar 1986
      4338SEHK (The Stock Exchange of Hong Kong Ltd.)YesCommon StockHKHKDMar 1986
      MSFTSWX (SIX Swiss Exchange)YesCommon StockCHCHFMar 1986
      MSFXTRA (XETRA Trading Platform)YesCommon StockDEEURMar 1986
      MSFENXTBR (Euronext Brussels)YesCommon StockBEUSDMar 1986
      MSFTBVC (Bolsa de Valores de Colombia)YesCommon StockCOCOPMar 1986
      MSFTSNSE (Santiago Stock Exchange)YesCommon StockCLUSDMar 1986
      MS-UETLX (Eurotlx)YesCommon StockITEURMar 1986
      MSFTWBAG (Wiener Boerse AG)YesCommon StockATEURMar 1986
      MSFTBASE (Buenos Aires Stock Exchange)CEDEARS EACH REP 1/5 ORD USD0.000025ARARSDec 1999
      MSFT34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COM SHSBRBRLDec 2011

      Biography

      Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. The company’s Productivity and Business Processes segment offers Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business, as well as related Client Access Licenses (CAL); and Skype, Outlook.com, and OneDrive. It also provides LinkedIn that includes Talent and marketing solutions, and subscriptions; and Dynamics 365, a set of cloud-based and on-premises business solutions for small and medium businesses, large organizations, and divisions of enterprises. The company’s Intelligent Cloud segment licenses SQL and Windows Servers, Visual Studio, System Center, and related CALs; GitHub that provides a collaboration platform and code hosting service for developers; and Azure, a cloud platform. It also provides support services and Microsoft consulting services to assist customers in developing, deploying, and managing Microsoft server and desktop solutions; and training and certification to developers and IT professionals on various Microsoft products. The company’s More Personal Computing segment offers Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows Commercial comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows Internet of Things; and MSN advertising. It also provides Microsoft Surface, PC accessories, and other intelligent devices; Gaming, including Xbox hardware, and Xbox software and services; video games and third-party video game royalties; and Search, including Bing and Microsoft advertising. The company sells its products through distributors and resellers; and directly through digital marketplaces, online stores, and retail stores. It has strategic partnerships with Humana Inc. and Nokia. The company was founded in 1975 and is headquartered in Redmond, Washington. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/20 23:43
      End of Day Share Price2020/01/17 00:00
      Earnings2019/09/30
      Annual Earnings2019/06/30


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.