Microsoft Corp (NASDAQ: MSFT)

Sector: Technology Industry: Software - Infrastructure CIK: 0000789019
P/B 9.76
P/E 33.76
P/S 12.06
Market Cap 3,542.10 Bn
ROIC (Qtr) 26.57
Div Yield % 0.89
Rev 1y % (Qtr) 18.43
Total Debt (Qtr) 60.56 Bn
Debt/Equity (Qtr) 0.17

About

Microsoft Corporation, commonly known as Microsoft, is a technology company that operates in the global technology industry. It was established in 1975 and has its headquarters in Redmond, Washington. Microsoft's ticker symbol is MSFT. Microsoft is a leading provider of software, services, and devices that enable people and businesses to achieve their full potential. The company's offerings are designed to make digital technology and artificial intelligence (AI) accessible to everyone while promoting responsible use and development of these technologies. Microsoft's...

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Analysis

Pros

  • Strong operating cash flow of 147.04B provides robust 2.43x coverage of total debt 60.56B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 28.85B provide 3.68x coverage of short-term debt 7.83B, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 495.62B provides 8.18x coverage of total debt 60.56B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 147.04B provides strong 12.13x coverage of stock compensation 12.12B, indicating sustainable incentive practices.
  • Operating cash flow of 147.04B provides exceptional 58.79x coverage of interest expenses 2.50B, showing strong debt service capability.

Cons

  • Operating cash flow of 147.04B barely covers its investment activities of (91.96B), with a coverage ratio of -1.60, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 147.04B provides thin coverage of dividend payments of (24.68B) with a -5.96 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (91.96B) provide weak support for R&D spending of 33.09B, which is -2.78x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 28.85B provide limited coverage of acquisition spending of (4.71B), which is -6.13x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 52.89B relative to inventory of 1.13B (46.81 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

Peer Comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,542.10 Bn 33.76 12.06 60.56 Bn
2 ORCL Oracle Corp 533.93 Bn 34.61 8.75 124.39 Bn
3 PLTR Palantir Technologies Inc. 437.56 Bn 399.47 112.31 0.24 Bn
4 PANW Palo Alto Networks Inc 125.16 Bn 112.03 13.10 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 120.85 Bn -384.67 26.47 0.82 Bn
6 SNPS Synopsys Inc 71.69 Bn 35.89 11.14 15.14 Bn
7 NET Cloudflare, Inc. 67.84 Bn -658.43 33.70 3.50 Bn
8 FTNT Fortinet, Inc. 63.33 Bn 33.80 9.66 1.00 Bn

Industry Comparisons

Current Valuation

Metric Value Industry Percentile
EV to Assets 5.61 2.56
EV to Cash from Ops. 24.30 38.32
EV to Debt 58.99 -11.37
EV to EBIT 27.45 -12.79
EV to EBITDA 20.32 7.72
EV to Free Cash Flow [EV/FCF] 45.79 24.22
EV to Market Cap 1.01 0.58
EV to Revenue 12.16 -35.00
Price to Book Value [P/B] 9.76 3.74
Price to Earnings [P/E] 33.76 -18.61

Dividend Metrics

Metric Value Industry Percentile
Dividend Coverage Ratio 4.25 -0.30
Dividend Payout Ratio % 23.50 2.69
Dividend per Basic Share 3.32 0.10
FCF Dividend Payout Ratio % 31.63 1.67
Interest Coverage 52.04 -13.15

Growth Metrics

Metric Value Industry Percentile
Capex Growth (1y) % -39.49 -404.11
Cash and Equivalents Growth (1y) % 38.43 226.02
Dividend Growth (1y) % 10.67 -0.27
EBIAT Growth (1y) % 15.07 31.15
EBITDA Growth (1y) % 26.60 49.02
EBIT Growth (1y) % 14.41 25.85
EBT Growth (1y) % 15.24 17.82
EPS Growth (1y) % 15.94 70.69
FCF Growth (1y) % 7.37 295.45
Gross Profit Growth (1y) % 14.61 49.96

Liquidity Ratios

Metric Value Industry Percentile
Asset Utilization Ratio 0.46 0.68
Cash Payout Ratio 0.11 0.02
Cash Ratio 0.21 1.21
Current Ratio 1.40 2.57
Debt to Equity Ratio 0.17 -0.93
Interest Cover Ratio 52.04 -13.15
Times Interest Earned 52.04 -13.15

Profitability

Metric Value Industry Percentile
EBITDA Margin % 57.90 -544.82
EBIT Margin % 44.30 -197.78
EBT Margin % 43.45 -602.74
Gross Margin % 68.80 52.06
Net Profit Margin % 35.70 -605.52