Microsoft Corporation

NasdaqGS:MSFT Stock Report

Market Cap: US$3.0t

Microsoft Valuation

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

Valuation Score

3/6

Valuation Score 3/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • PM 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 ($407.72) is trading below our estimate of fair value ($443.62)

Significantly Below Fair Value: MSFT is trading below fair value, but not by a significant amount.


Key Valuation Metric

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

Other financial metrics that can be useful for relative valuation.

MSFT key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue13.4x
Enterprise Value/EBITDA25.8x
PEG Ratio2.9x

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 Average28.1x
GOOGL Alphabet
23x11.9%US$1.7t
META Meta Platforms
31.6x14.2%US$1.2t
ORCL Oracle
30.3x14.2%US$306.2b
AAPL Apple
27.8x4.7%US$2.8t
MSFT Microsoft
36.7x12.4%US$3.0t

Price-To-Earnings vs Peers: MSFT is expensive based on its Price-To-Earnings Ratio (36.7x) compared to the peer average (28.1x).


Price to Earnings Ratio vs Industry

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

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a16.3%
n/an/an/a
No. of CompaniesPE048121620

Fetching data

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a16.3%
n/an/an/a
No more companies

Price-To-Earnings vs Industry: MSFT is good value based on its Price-To-Earnings Ratio (36.7x) compared to the US Software industry average (43.6x).


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 Ratio36.7x
Fair PE Ratio68.2x

PM vs Fair Ratio: MSFT is good value based on its Price-To-Earnings Ratio (36.7x) compared to the estimated Fair Price-To-Earnings Ratio (68.2x).


Analyst Price Targets

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

The above table shows the analyst MSFT forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUS$407.72
US$465.63
+14.2%
7.4%US$600.00US$399.70n/a51
Feb ’25US$403.78
US$456.93
+13.2%
8.4%US$600.00US$370.00n/a49
Jan ’25US$376.04
US$415.87
+10.6%
9.7%US$600.00US$298.10n/a51
Dec ’24US$374.51
US$406.73
+8.6%
6.9%US$475.00US$298.10n/a50
Nov ’24US$346.07
US$403.27
+16.5%
6.6%US$450.00US$298.10n/a50
Oct ’24US$315.75
US$393.69
+24.7%
7.4%US$440.00US$298.10n/a49
Sep ’24US$328.66
US$389.52
+18.5%
10.0%US$440.00US$232.00n/a49
Aug ’24US$336.34
US$390.21
+16.0%
9.7%US$450.00US$232.00n/a50
Jul ’24US$340.54
US$347.32
+2.0%
10.9%US$450.00US$232.00n/a46
Jun ’24US$332.58
US$341.67
+2.7%
10.7%US$450.00US$232.00n/a47
May ’24US$305.56
US$331.47
+8.5%
9.3%US$420.00US$232.00n/a48
Apr ’24US$288.30
US$298.07
+3.4%
12.2%US$420.00US$212.00n/a47
Mar ’24US$246.27
US$292.33
+18.7%
11.2%US$411.00US$212.00n/a47
Feb ’24US$252.75
US$286.12
+13.2%
11.5%US$411.00US$212.00US$403.7847
Jan ’24US$239.82
US$296.84
+23.8%
11.4%US$411.00US$234.00US$376.0445
Dec ’23US$254.69
US$296.98
+16.6%
11.5%US$411.00US$234.00US$374.5144
Nov ’23US$228.17
US$300.44
+31.7%
11.0%US$411.00US$255.00US$346.0742
Oct ’23US$232.90
US$333.81
+43.3%
9.1%US$411.00US$280.52US$315.7542
Sep ’23US$260.40
US$333.62
+28.1%
9.2%US$411.00US$280.52US$328.6642
Aug ’23US$278.01
US$335.27
+20.6%
9.8%US$411.00US$275.00US$336.3441
Jul ’23US$259.58
US$356.83
+37.5%
7.7%US$411.00US$298.18US$340.5441
Jun ’23US$272.42
US$361.51
+32.7%
6.9%US$411.00US$298.18US$332.5843
May ’23US$277.52
US$364.54
+31.4%
6.6%US$411.00US$298.18US$305.5644
Apr ’23US$309.42
US$373.69
+20.8%
6.5%US$425.00US$306.55US$288.3042
Mar ’23US$294.95
US$373.30
+26.6%
6.5%US$425.00US$306.55US$246.2743
Feb ’23US$308.76
US$372.06
+20.5%
6.4%US$425.00US$306.55US$252.7543

Analyst Forecast: Target price is less than 20% higher than the current share price.


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