We’ve recently updated our valuation analysis.

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

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

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/Revenue8.9x
Enterprise Value/EBITDA18.6x
PEG Ratio1.9x

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.
CompanyPEEstimated GrowthMarket Cap
Peer Average20.9x
GOOGL Alphabet
19.2x12.2%US$1.3t
META Meta Platforms
13.8x8.7%US$397.9b
ORCL Oracle
27.3x17.9%US$239.9b
AAPL Apple
23.2x6.8%US$2.3t
MSFT Microsoft
27.4x14.1%US$1.8t

Price-To-Earnings vs Peers: MSFT is expensive based on its Price-To-Earnings Ratio (27.4x) compared to the peer average (20.9x).


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/a21.5%
n/an/an/a

Price-To-Earnings vs Industry: MSFT is good value based on its Price-To-Earnings Ratio (27.4x) compared to the US Software industry average (42.7x)


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 Ratio27.4x
Fair PE Ratio47.4x

Price-To-Earnings vs Fair Ratio: MSFT is good value based on its Price-To-Earnings Ratio (27.4x) compared to the estimated Fair Price-To-Earnings Ratio (47.4x).


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 ($248.16) is trading below our estimate of fair value ($257.94)

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


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$248.16
US$286.32
+15.4%
11.5%US$411.00US$212.00n/a47
Jan ’24US$239.82
US$296.84
+23.8%
11.4%US$411.00US$234.00n/a45
Dec ’23US$254.69
US$296.98
+16.6%
11.5%US$411.00US$234.00n/a44
Nov ’23US$228.17
US$300.44
+31.7%
11.0%US$411.00US$255.00n/a42
Oct ’23US$232.90
US$333.81
+43.3%
9.1%US$411.00US$280.52n/a42
Sep ’23US$260.40
US$333.62
+28.1%
9.2%US$411.00US$280.52n/a42
Aug ’23US$278.01
US$335.27
+20.6%
9.8%US$411.00US$275.00n/a41
Jul ’23US$259.58
US$356.83
+37.5%
7.7%US$411.00US$298.18n/a41
Jun ’23US$272.42
US$361.51
+32.7%
6.9%US$411.00US$298.18n/a43
May ’23US$277.52
US$364.54
+31.4%
6.6%US$411.00US$298.18n/a44
Apr ’23US$309.42
US$373.69
+20.8%
6.5%US$425.00US$306.55n/a42
Mar ’23US$294.95
US$373.30
+26.6%
6.5%US$425.00US$306.55n/a43
Feb ’23US$308.76
US$372.06
+20.5%
6.4%US$425.00US$306.55n/a43
Jan ’23US$336.32
US$373.68
+11.1%
7.1%US$440.00US$299.93US$239.8241
Dec ’22US$330.08
US$364.81
+10.5%
6.8%US$410.00US$299.93US$254.6937
Nov ’22US$329.37
US$358.19
+8.7%
7.0%US$407.00US$299.93US$228.1736
Oct ’22US$289.10
US$336.22
+16.3%
7.3%US$411.00US$281.78US$232.9035
Sep ’22US$301.83
US$330.93
+9.6%
7.2%US$411.00US$281.78US$260.4033
Aug ’22US$284.91
US$326.50
+14.6%
7.3%US$411.00US$281.78US$278.0133
Jul ’22US$271.60
US$296.26
+9.1%
5.8%US$340.00US$253.40US$259.5834
Jun ’22US$247.40
US$292.94
+18.4%
6.2%US$340.00US$250.00US$272.4235
May ’22US$252.18
US$290.64
+15.3%
7.6%US$340.00US$220.00US$277.5234
Apr ’22US$242.35
US$275.21
+13.6%
7.7%US$315.00US$220.00US$309.4234
Mar ’22US$236.94
US$273.91
+15.6%
8.0%US$315.00US$220.00US$294.9535
Feb ’22US$239.65
US$273.26
+14.0%
7.9%US$315.00US$220.00US$308.7635
Jan ’22US$222.42
US$244.14
+9.8%
7.1%US$278.00US$180.00US$336.3233

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


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