"The more things change, the more they stay the same," for the Washington-based software company, analysts said.
"Microsoft shares have rallied sharply over the past year driven by expectations for improved operational performance due to new management and the influence of activist shareholders. However, we believe the underlying issues are more related to challenging fundamentals that persist today," analysts said.
"We believe the 'new' Microsoft will look very much like the 'old' Microsoft for some time," analysts added.
Shares of Microsoft are up 0.35% to $48.87 in pre-market trading.
Separately, TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICROSOFT CORP (MSFT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, MSFT's share price has jumped by 30.00%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MSFT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 28.1%. Since the same quarter one year prior, revenues rose by 25.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- MSFT's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, MSFT has a quick ratio of 2.28, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has slightly increased to $8,354.00 million or 1.81% when compared to the same quarter last year. Despite an increase in cash flow, MICROSOFT CORP's cash flow growth rate is still lower than the industry average growth rate of 12.01%.
- You can view the full analysis from the report here: MSFT Ratings Report