NasdaqGS:MSFT

Stock Analysis Report

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Executive Summary

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


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's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

2.2%

MSFT

2.6%

US Software

2.9%

US Market


1 Year Return

45.0%

MSFT

30.6%

US Software

8.9%

US Market

Return vs Industry: MSFT exceeded the US Software industry which returned 34.7% over the past year.

Return vs Market: MSFT exceeded the US Market which returned 8.5% over the past year.


Shareholder returns

MSFTIndustryMarket
7 Day2.2%2.6%2.9%
30 Day2.5%7.7%10.6%
90 Day14.7%16.9%5.1%
1 Year46.8%45.0%31.6%30.6%11.4%8.9%
3 Year170.2%157.6%129.6%121.7%34.3%25.4%
5 Year341.0%299.1%205.9%187.2%60.7%42.7%

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?

30.56x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: MSFT ($185.36) is trading above our estimate of fair value ($170.35)

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 (30.6x) compared to the Software industry average (48.6x).

PE vs Market: MSFT is poor value based on its PE Ratio (30.6x) compared to the US market (15.8x).


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 (12.3x) compared to the US Software industry average (6.1x).


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 (2.2%).

Earnings vs Market: MSFT's earnings (10.9% per year) are forecast to grow slower than the US market (22.1% per year).

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

Revenue vs Market: MSFT's revenue (10.3% per year) is forecast to grow faster than the US market (8.9% per year).

High Growth Revenue: MSFT's revenue (10.3% 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 (35.7%)


Next Steps

Past Performance

How has Microsoft performed over the past 5 years?

25.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MSFT has high quality earnings.

Growing Profit Margin: MSFT's current net profit margins (33.4%) are higher than last year (28.6%).


Past Earnings Growth Analysis

Earnings Trend: MSFT's earnings have grown significantly by 25.3% per year over the past 5 years.

Accelerating Growth: MSFT's earnings growth over the past year (32.3%) exceeds its 5-year average (25.3% per year).

Earnings vs Industry: MSFT earnings growth over the past year (32.3%) exceeded the Software industry 9.6%.


Return on Equity

High ROE: MSFT's Return on Equity (40.4%) is considered outstanding.


Next Steps

Financial Health

How is Microsoft's financial position?


Financial Position Analysis

Short Term Liabilities: MSFT's short term assets ($170.5B) exceed its short term liabilities ($58.7B).

Long Term Liabilities: MSFT's short term assets ($170.5B) exceed its long term liabilities ($112.2B).


Debt to Equity History and Analysis

Debt Level: MSFT's debt to equity ratio (58.2%) is considered high.

Reducing Debt: MSFT's debt to equity ratio has increased from 35.6% to 58.2% over the past 5 years.

Debt Coverage: MSFT's debt is well covered by operating cash flow (87.2%).

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


Balance Sheet


Next Steps

Dividend

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

1.10%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: MSFT's dividend (1.1%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: MSFT's dividend (1.1%) is low compared to the top 25% of dividend payers in the US market (4.48%).


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 (32.8%), 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 (30.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.3yrs

Average management tenure


CEO

Satya Nadella (52yo)

6.33yrs

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 ($USD42.91M) is above average for companies of similar size in the US market ($USD11.58M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Satya Nadella
CEO & Director6.33yrsUS$42.91m0.016% $229.7m
Bradford Smith
President & Chief Legal Officer4.75yrsUS$17.37m0.0099% $138.9m
Amy Hood
Executive VP & CFO7.08yrsUS$20.23m0.0047% $66.8m
Jean-Philippe Courtois
Executive VP and President of Microsoft Global Sales3.92yrsUS$15.08m0.011% $148.7m
Margaret Johnson
Executive Vice President of Business Development5.75yrsUS$10.43m0.0040% $56.8m
Frank Brod
Corporate VP of Finance & Administration and Chief Accounting Officerno datano data0.00075% $10.5m
J. Scott
CTO and Executive VP of Technology & Research3.42yrsno datano data
Nick Coleman
Chief Technology Officer1.67yrsno datano data
Vikas Mehta
Director of Investor Relationsno datano datano data
Frank Shaw
Corporate Vice President for Corporate Communications10.83yrsno datano data

5.3yrs

Average Tenure

57yo

Average Age

Experienced Management: MSFT's management team is seasoned and experienced (5.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Satya Nadella
CEO & Director6.33yrsUS$42.91m0.016% $229.7m
Charles Scharf
Independent Director5.67yrsUS$325.00k0.00054% $7.6m
John Thompson
Independent Chairman6.33yrsUS$552.50k0.00037% $5.2m
John Stanton
Independent Director5.92yrsUS$355.00k0.0011% $15.2m
Reid Hoffman
Independent Director3.25yrsUS$325.00k0.00021% $3.0m
Penny Pritzker
Independent Director2.58yrsUS$340.00k0.00016% $2.2m
Sandra Peterson
Independent Director4.5yrsUS$325.00k0.000070% $984.0k
Padmasree Warrior
Independent Director4.5yrsUS$325.00k0.00014% $2.0m
Hugh Johnston
Independent Director2.75yrsUS$351.00k0.000060% $843.4k
Teri List-Stoll
Independent Director5.67yrsUS$355.00k0.000040% $562.3k

5.1yrs

Average Tenure

57.5yo

Average Age

Experienced Board: MSFT's board of directors are considered experienced (5.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

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$1.406t
  • Shares outstanding: 7.58b
  • 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
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
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
MSFENXTBR (Euronext Brussels)YesCommon StockBEUSDMar 1986
US_MSFTKAS (Kazakhstan Stock Exchange)YesCommon StockKZKZTMar 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. Its 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); Skype, Outlook.com, and OneDrive; 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. Its 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. Its More Personal Computing segment offers Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows Commercial, such as 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. It sells its products through distributors and resellers; and directly through digital marketplaces, online stores, and retail stores. It has strategic partnerships with Humana Inc., Nokia, Telkomsel, Swiss Re, Kubota Corporation, and FedEx Corp. 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 Analysis2020/06/04 02:41
End of Day Share Price2020/06/03 00:00
Earnings2020/03/31
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.