Microsoft's Beautiful Business RecordNext let's move on to examining Microsoft's business by looking at its earnings per share growth since 1999. The orange line on the following graph plots Microsoft's earnings per share and represents a fair value PE ratio of 15.
The green shaded area represents total earnings. Looking to the green shaded rectangle in the Fast Facts to the right of the graph, we discover that Microsoft's earnings growth averaged 12.5% per annum, which incidentally is almost exactly two times the growth rate of the S&P 500.
Clearly, Microsoft's business performed exceptionally well since calendar year 1999, producing a superior and impressive long-term record of consistent above-average growth.
At this point, we should be asking the questions: How and why is the stock of such a great business has performed so badly?
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