Microsoft (MSFT) Stock Analysis
This is a peer-relative look at Microsoft (MSFT): its performance, risk, profitability, growth, financial strength, dividend, and valuation are each measured against its Software & Services peers, so every number reads in context rather than in isolation.
Company Profile
| Profile Item | MSFT |
|---|---|
| Name | Microsoft Corp. |
| Country/Region | United States |
| GICS Sector | Information Technology |
| GICS Industry Group | Software & Services |
| GICS Industry | Software |
| GICS Sub-Industry | Systems Software |
| Market Capitalization | 2,954.66 billion USD |
| Currency | USD |
| Exchange | Nasdaq |
| Listing Date | March 13, 1986 |
| Security Type | Common Stock |
Price Performance
Cumulative Growth
Trailing Returns
Calendar-Year Returns
Performance Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| Total Return (1Y) | -21.40% | -16.02% |
| Total Return (3Y, Annualized) | 5.80% | -0.06% |
| Total Return (5Y, Annualized) | 8.05% | -8.49% |
Risk Profile
Drawdown History
Return Distribution
Risk Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| Volatility (1Y, Annualized) | 27.54% | 59.05% |
| Beta (5Y) | 1.12 | 1.12 |
| Max Drawdown (5Y) | -37.15% | -77.02% |
Risk-Adjusted Performance
Risk-Return Positioning
Risk-Adjusted Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| Sharpe Ratio (1Y) | -0.92 | -0.37 |
| Sortino Ratio (1Y) | -1.23 | -0.54 |
Profitability
ROE (TTM)
Microsoft (MSFT) posts ROE of 34.01%, in the upper peer quartile. That suggests the company earns more from each dollar of shareholders’ equity than most industry peers, a useful capital-efficiency signal.
MSFT
Software & Services industry group
34.01%
Group distribution
- Max
- 53.38%
- MSFT
- 34.01%
- Q3
- 16.62%
- Median
- 5.48%
- Q1
- -12.77%
- Min
- -55.27%
Largest peers
- ORCL
- 53.38%
- IBM
- 35.77%
- MSFT
- 34.01%
- PLTR
- 32.59%
- SAP
- 16.35%
- PANW
- 4.83%
- CRWD
- -0.25%
Net Margin (TTM)
Microsoft (MSFT) keeps 39.34% of revenue as net profit, putting net margin in the upper peer quartile. After operating costs, interest, and taxes, more of each sales dollar reaches shareholders than it does at most industry peers.
MSFT
Software & Services industry group
39.34%
Group distribution
- Max
- 44.20%
- MSFT
- 39.34%
- Q3
- 15.06%
- Median
- 3.70%
- Q1
- -5.19%
- Min
- -34.99%
Largest peers
- PLTR
- 43.67%
- MSFT
- 39.34%
- ORCL
- 25.37%
- SAP
- 19.58%
- IBM
- 15.61%
- PANW
- 7.95%
- CRWD
- -0.60%
Operating Margin (TTM)
Microsoft (MSFT) turns 46.33% of revenue into operating profit, putting operating margin in the upper peer quartile. Before financing and taxes enter the picture, the day-to-day business keeps more of each sales dollar than most industry peers.
MSFT
Software & Services industry group
46.33%
Group distribution
- Max
- 46.97%
- MSFT
- 46.33%
- Q3
- 16.51%
- Median
- 5.70%
- Q1
- -9.95%
- Min
- -43.35%
Largest peers
- MSFT
- 46.33%
- PLTR
- 46.18%
- ORCL
- 36.20%
- SAP
- 30.03%
- IBM
- 13.81%
- CRWD
- -2.21%
- PANW
- -2.47%
Profitability Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| ROE (TTM) | 34.01% | 5.48% |
| ROA (TTM) | 14.81% | 1.72% |
| Net Margin (TTM) | 39.34% | 3.70% |
| Operating Margin (TTM) | 46.33% | 5.70% |
| Gross Margin (TTM) | 68.31% | 69.39% |
Growth
Revenue Growth
Microsoft (MSFT) grew revenue 14.93%, roughly around the peer group's normal range. Top-line momentum looks broadly typical for the industry.
EPS Growth
Microsoft (MSFT) grew earnings per share 15.59%, roughly around the peer group's normal range. Bottom-line momentum looks broadly typical for the industry.
Growth Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| Revenue Growth (YoY) | 14.93% | 14.27% |
| Revenue Growth (3Y CAGR) | 12.42% | 13.51% |
| EPS Growth (YoY) | 15.59% | 7.85% |
| EPS Growth (3Y CAGR) | 12.23% | 18.25% |
Financial Strength
Current Ratio (MRQ)
Microsoft (MSFT) has current ratio of 1.28, in the healthier middle range for its industry. The short-term asset cushion looks balanced relative to peers rather than stretched thin.
MSFT
Software & Services industry group
1.28
Group distribution
- Max
- 5.55
- Q3
- 2.88
- Median
- 1.70
- MSFT
- 1.28
- Q1
- 1.06
- Min
- 0.03
Largest peers
- PLTR
- 6.91
- CRWD
- 1.53
- MSFT
- 1.28
- ORCL
- 1.12
- SAP
- 1.07
- PANW
- 0.86
- IBM
- 0.80
Debt / Equity (MRQ)
Microsoft (MSFT) has debt-to-equity ratio of 0.30, roughly in line with the peer group’s normal leverage range. Its mix of debt and equity looks typical for the industry.
MSFT
Software & Services industry group
0.30
Group distribution
- Max
- 2.62
- Q3
- 1.10
- Median
- 0.31
- MSFT
- 0.30
- Q1
- 0.06
- Min
- 0.00
Largest peers
- ORCL
- 3.89
- IBM
- 2.11
- MSFT
- 0.30
- CRWD
- 0.18
- SAP
- 0.17
- PANW
- 0.08
- PLTR
- 0.02
Financial Strength Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| Current Ratio (MRQ) | 1.28 | 1.70 |
| Debt / Equity (MRQ) | 0.30 | 0.31 |
| Net Debt / EBITDA | 0.26 | -0.10 |
Dividends
Dividend Yield (TTM)
Microsoft (MSFT) has dividend yield of 0.88%, above the entire industry range. That headline income is large, but yields this far above peers often come from a falling share price or an at-risk payout, so dividend safety matters more than the percentage itself.
MSFT
Software & Services industry group
0.88%
Group distribution
- MSFT
- 0.88%
- Max
- 0.00%
- Q3
- 0.00%
- Median
- 0.00%
- Q1
- 0.00%
- Min
- 0.00%
Largest peers
- IBM
- 3.15%
- ORCL
- 1.65%
- SAP
- 1.58%
- MSFT
- 0.88%
- PLTR
- 0.00%
- PANW
- 0.00%
- CRWD
- 0.00%
Dividend Payout Ratio (TTM)
Microsoft (MSFT) has payout ratio of 20.73%, above the peer distribution for its industry. The dividend consumes more reported earnings than peers normally do, leaving unusually thin earnings cover.
MSFT
Software & Services industry group
20.73%
Group distribution
- MSFT
- 20.73%
- Max
- 0.00%
- Q3
- 0.00%
- Median
- 0.00%
- Q1
- 0.00%
- Min
- 0.00%
Largest peers
- IBM
- 59.47%
- SAP
- 37.15%
- ORCL
- 34.31%
- MSFT
- 20.73%
- PLTR
- 0.00%
- PANW
- 0.00%
- CRWD
- 0.00%
Dividend Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| Dividend Yield (TTM) | 0.88% | 0.00% |
| Dividend Payout Ratio (TTM) | 20.73% | 0.00% |
Valuation
P/E Ratio (TTM)
Microsoft (MSFT) trades at P/E ratio of 23.70, near the industry’s usual earnings multiple. The stock is not showing a clear peer discount or premium on trailing earnings.
MSFT
Software & Services industry group
23.70
Group distribution
- Max
- 122.10
- Q3
- 63.18
- Median
- 31.83
- MSFT
- 23.70
- Q1
- 16.77
- Min
- 0.43
Largest peers
- PANW
- 302.79
- PLTR
- 150.75
- MSFT
- 23.70
- SAP
- 22.27
- ORCL
- 20.83
- IBM
- 18.83
- CRWD
- --
P/S Ratio (TTM)
Microsoft (MSFT) trades at 9.28 on P/S ratio, in the higher sales-valuation quartile. Investors are paying up for each dollar of revenue, so stronger margins, growth, or revenue quality need to carry that price.
MSFT
Software & Services industry group
9.28
Group distribution
- Max
- 18.71
- MSFT
- 9.28
- Q3
- 8.98
- Median
- 4.08
- Q1
- 2.15
- Min
- 0.02
Largest peers
- PLTR
- 60.88
- CRWD
- 38.21
- PANW
- 26.29
- MSFT
- 9.28
- ORCL
- 5.43
- SAP
- 4.87
- IBM
- 2.87
P/B Ratio (MRQ)
Microsoft (MSFT) trades at 7.13 on P/B ratio, roughly in line with the industry’s normal price-to-book range. Its balance sheet is not being priced at a clear discount or premium versus peers.
MSFT
Software & Services industry group
7.13
Group distribution
- Max
- 16.97
- Q3
- 8.89
- MSFT
- 7.13
- Median
- 4.00
- Q1
- 1.93
- Min
- -8.32
Largest peers
- CRWD
- 42.00
- PLTR
- 37.63
- PANW
- 10.05
- ORCL
- 9.74
- MSFT
- 7.13
- IBM
- 6.00
- SAP
- 3.45
Valuation Metrics
| Metric | Current stock: MSFT | Industry group median |
|---|---|---|
| P/E Ratio (TTM) | 23.70 | 31.83 |
| P/S Ratio (TTM) | 9.28 | 4.08 |
| P/B Ratio (MRQ) | 7.13 | 4.00 |
| Free Cash Flow Yield (TTM) | 1.25% | 4.41% |