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Microsoft Corp
MSFT : NASDAQ : Technology
$47.98 -0.72 | -1.48%
Today's Range: 47.57 - 49.05
Avg. Daily Volume: 34,724,600
11/21/14 - 4:14 PM ET

Financial Analysis


MICROSOFT CORP's gross profit margin for the first quarter of its fiscal year 2015 has decreased when compared to the same period a year ago. Even though sales increased, the net income has decreased. MICROSOFT CORP is extremely liquid. Currently, the Quick Ratio is 2.28 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has decreased from the same period last year.

During the same period, stockholders' equity ("net worth") has increased by 10.44% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.

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Income Statement Q1 FY15 Q1 FY14
Net Sales ($mil)23201.018529.0
EBITDA ($mil)8412.07288.0
EBIT ($mil)6984.06334.0
Net Income ($mil)4540.05244.0


Balance Sheet Q1 FY15 Q1 FY14
Cash & Equiv. ($mil)89193.080672.0
Total Assets ($mil)169656.0142348.0
Total Debt ($mil)23720.015932.0
Equity ($mil)90170.081641.0


Profitability Q1 FY15 Q1 FY14
Gross Profit Margin70.577.38
EBITDA Margin36.2539.33
Operating Margin30.134.18
Sales Turnover0.540.56
Return on Assets12.5915.9
Return on Equity23.6927.73
Debt Q1 FY15 Q1 FY14
Current Ratio2.522.87
Debt/Capital0.210.16
Interest Expense161.0118.0
Interest Coverage43.3853.68


Share Data Q1 FY15 Q1 FY14
Shares outstanding (mil)8255.08346.0
Div / share0.280.23
EPS0.540.62
Book value / share10.929.78
Institutional Own % n/a n/a
Avg Daily Volume3.4367148E72.8468776E7

Valuation


BUY. The current P/E ratio indicates a significant discount compared to an average of 36.10 for the Software industry and a value on par with the S&P 500 average of 19.78. To use another comparison, its price-to-book ratio of 4.54 indicates a significant premium versus the S&P 500 average of 2.73 and a significant discount versus the industry average of 7.03. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. Upon assessment of these and other key valuation criteria, MICROSOFT CORP proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
MSFT 19.45 Peers 36.10   MSFT 12.59 Peers 25.83

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

MSFT is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

MSFT is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
MSFT 15.65 Peers 59.32   MSFT 20.47 Peers 10.16

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

MSFT is trading at a significant discount to its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

MSFT trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
MSFT 4.54 Peers 7.03   MSFT -5.21 Peers -19.61

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

MSFT is trading at a significant discount to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

MSFT is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
MSFT 4.49 Peers 5.56   MSFT 13.37 Peers 16.05

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

MSFT is trading at a discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

MSFT trails its peers on the basis of sales growth

 

 

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