Microsoft (NasdaqGS:MSFT) - Share price, News & Analysis

MSFT fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	3/6
Past Performance	6/6
Financial Health	6/6
Dividends	4/6

MSFT Stock Overview

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

Rewards

Trading at 37% below our estimate of its fair value

Earnings are forecast to grow 11.61% per year

Earnings grew by 29.4% over the past year

Risk Analysis

No risks detected for MSFT from our risk checks.

Microsoft Competitors

Palo Alto Networks

NasdaqGS:PANW

US$50.5b

Fortinet

NasdaqGS:FTNT

US$47.8b

NortonLifeLock

NasdaqGS:NLOK

US$14.5b

UiPath

NYSE:PATH

US$9.7b

Price History & Performance

Summary of all time highs, changes and price drops for Microsoft
Historical stock prices
Current Share Price	US$273.24
52 Week High	US$349.67
52 Week Low	US$243.00
Beta	0.94
1 Month Change	-5.66%
3 Month Change	-8.10%
1 Year Change	9.44%
3 Year Change	120.93%
5 Year Change	280.77%
Change since IPO	44,234.18%

Recent News & Updates

May 26

Here's Why We Are Waiting To Double Down On Microsoft

We have a stake in Microsoft and we love many things about the company. We believe there is a long runway for growth for the company, and Microsoft is expanding to many software verticals through acquisitions. For two major reasons, we believe now is not the right time for us to boost our stake in the company.

May 24

Microsoft (NASDAQ: MSFT) is Ticking a lot of Boxes vs Peers

Very few shares have been spared during the market selloff which has been led by technology stocks. Microsoft (NASDAQ: MSFT) has fared better than most but is still down 25% year to date and 17% since the end of March. While its share price is likely to remain at the mercy of most market sentiment, it’s also starting to stand out amongst the large-cap tech stocks.

May 19

Microsoft: Resilient, While The Rest Of The Tech Universe Gets Picked Apart

Azure growth still strong and offsetting weakness elsewhere. Clear visibility on earnings growth. As tech investors become picky in an environment of rising rates, Microsoft remains attractive.

May 11

Microsoft: Nearly Perfect But Overvalued

Microsoft has strong fundamentals and has done a great job diversifying its revenue streams. The tech industry is struggling and supply chain issues continue to cause trouble across the market, but Microsoft may be in a better position than its competitors. Unique product expansions and the rising popularity of Edge may help the company generate higher revenue.

Shareholder Returns

	MSFT	US Software	US Market
7D	8.2%	7.3%	6.2%
1Y	9.4%	-9.7%	-11.4%

Return vs Industry: MSFT exceeded the US Software industry which returned -9.7% over the past year.

Return vs Market: MSFT exceeded the US Market which returned -10.2% over the past year.

Price Volatility

Is MSFT's price volatile compared to industry and market?
MSFT volatility
MSFT Average Weekly Movement	5.3%
Software Industry Average Movement	11.0%
Market Average Movement	7.8%
10% most volatile stocks in US Market	17.0%
10% least volatile stocks in US Market	2.8%

Stable Share Price: MSFT is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: MSFT's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1975	181,000	Satya Nadella	https://www.microsoft.com

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, OneDrive, and LinkedIn; and Dynamics 365, a set of cloud-based and on-premises business solutions for organizations and enterprise divisions. Its Intelligent Cloud segment licenses SQL, 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.

Microsoft Fundamentals Summary

How do Microsoft's earnings and revenue compare to its market cap?
MSFT fundamental statistics
Market Cap	US$2.04t
Earnings (TTM)	US$72.46b
Revenue (TTM)	US$192.56b

28.2x

P/E Ratio

10.6x

P/S Ratio

Is MSFT overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MSFT income statement (TTM)
Revenue	US$192.56b
Cost of Revenue	US$60.21b
Gross Profit	US$132.35b
Other Expenses	US$59.89b
Earnings	US$72.46b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	9.69
Gross Margin	68.73%
Net Profit Margin	37.63%
Debt/Equity Ratio	30.6%

How did MSFT perform over the long term?

See historical performance and comparison

Dividends

0.9%

Current Dividend Yield

25%

Payout Ratio

Valuation

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

Valuation Score

3/6

Valuation Score 3/6

Below Fair Value
Significantly Below Fair Value
PE vs Industry
PE vs Market
PEG Ratio
PB vs Industry

37.0%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: MSFT ($273.24) is trading below our estimate of fair value ($433.85)

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

Price To Earnings Ratio

PE vs Industry: MSFT is good value based on its Price-To-Earnings Ratio (28.2x) compared to the US Software industry average (41.9x).

PE vs Market: MSFT is poor value based on its Price-To-Earnings Ratio (28.2x) compared to the US market (15.6x).

Price to Earnings Growth Ratio

PEG Ratio: MSFT is poor value based on its PEG Ratio (2.4x)

Price to Book Ratio

PB vs Industry: MSFT is overvalued based on its Price-To-Book Ratio (12.5x) compared to the US Software industry average (3.8x).

Future Growth

How is Microsoft forecast to perform in the next 1 to 3 years based on estimates from 43 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

11.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MSFT's forecast earnings growth (11.6% per year) is above the savings rate (1.9%).

Earnings vs Market: MSFT's earnings (11.6% per year) are forecast to grow slower than the US market (13.2% per year).

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

Revenue vs Market: MSFT's revenue (12.5% per year) is forecast to grow faster than the US market (8.1% per year).

High Growth Revenue: MSFT's revenue (12.5% 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 (35.3%)

Past Performance

How has Microsoft performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

28.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MSFT has high quality earnings.

Growing Profit Margin: MSFT's current net profit margins (37.6%) are higher than last year (35%).

Past Earnings Growth Analysis

Earnings Trend: MSFT's earnings have grown significantly by 28.1% per year over the past 5 years.

Accelerating Growth: MSFT's earnings growth over the past year (29.4%) exceeds its 5-year average (28.1% per year).

Earnings vs Industry: MSFT earnings growth over the past year (29.4%) exceeded the Software industry 27.1%.

Return on Equity

High ROE: MSFT's Return on Equity (44.5%) is considered outstanding.

Financial Health

How is Microsoft's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MSFT's short term assets ($153.9B) exceed its short term liabilities ($77.4B).

Long Term Liabilities: MSFT's short term assets ($153.9B) exceed its long term liabilities ($104.2B).

Debt to Equity History and Analysis

Debt Level: MSFT has more cash than its total debt.

Reducing Debt: MSFT's debt to equity ratio has reduced from 120.5% to 30.6% over the past 5 years.

Debt Coverage: MSFT's debt is well covered by operating cash flow (174.5%).

Interest Coverage: MSFT's interest payments on its debt are well covered by EBIT (1260.7x coverage).

Balance Sheet

Dividend

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

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

0.91%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MSFT's dividend (0.91%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.49%).

High Dividend: MSFT's dividend (0.91%) is low compared to the top 25% of dividend payers in the US market (3.92%).

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.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (25.1%), MSFT's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (29.1%), MSFT's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

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

6.7yrs

Average management tenure

CEO

Satya Nadella (54 yo)

8.25yrs

Tenure

US$49,858,280

Compensation

Mr. Satya Nadella is Chief Executive Officer and Director of Microsoft Corporation since February 2014 and has been its Chairman since June 2021. Before being named CEO in February 2014, he held leadership...

CEO Compensation Analysis

Compensation vs Market: Satya's total compensation ($USD49.86M) is above average for companies of similar size in the US market ($USD13.06M).

Compensation vs Earnings: Satya's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: MSFT's management team is seasoned and experienced (6.7 years average tenure).

Board Members

Experienced Board: MSFT's board of directors are considered experienced (6.4 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/05/28 00:00
End of Day Share Price	2022/05/27 00:00
Earnings	2022/03/31
Annual Earnings	2021/06/30