Microsoft Corp

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MSFT : NASDAQ : Technology
$68.46 | %
Today's Range: 67.69 - 69.14
Avg. Daily Volume: 2.22453E7
04/28/17 - 4:00 PM ET

Financial Analysis


MICROSOFT CORP's gross profit margin for the third quarter of its fiscal year 2017 has increased when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. MICROSOFT CORP is extremely liquid. Currently, the Quick Ratio is 2.67 which clearly shows the ability to cover any short-term cash needs. The company's liquidity has increased from the same period last year.

During the same period, stockholders' equity ("net worth") has decreased by 6.78% 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 Q3 FY17 Q3 FY16
Net Sales ($mil)22090.020531.0
EBITDA ($mil)8047.06990.0
EBIT ($mil)5594.05283.0
Net Income ($mil)4801.03756.0


Balance Sheet Q3 FY17 Q3 FY16
Cash & Equiv. ($mil)126018.0105552.0
Total Assets ($mil)225017.0181869.0
Total Debt ($mil)84008.046394.0
Equity ($mil)69729.074806.0


Profitability Q3 FY17 Q3 FY16
Gross Profit Margin74.6270.7
EBITDA Margin36.4234.04
Operating Margin25.3225.73
Sales Turnover0.390.48
Return on Assets7.915.76
Return on Equity25.5414.01
Debt Q3 FY17 Q3 FY16
Current Ratio2.812.9
Debt/Capital0.550.38
Interest Expense609.0340.0
Interest Coverage9.1915.54


Share Data Q3 FY17 Q3 FY16
Shares outstanding (mil)7723.07870.0
Div / share0.390.36
EPS0.610.47
Book value / share9.039.51
Institutional Own % n/a n/a
Avg Daily Volume2.2561552E72.5967832E7

Valuation


BUY. This stock's P/E ratio indicates a significant discount compared to an average of 57.37 for the Software industry and a premium compared to the S&P 500 average of 25.27. For additional comparison, its price-to-book ratio of 7.56 indicates a significant premium versus the S&P 500 average of 3.03 and a discount versus the industry average of 8.94. The current price-to-sales ratio is well above the S&P 500 average, but 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 30.21 Peers 57.37   MSFT 14.22 Peers 22.48

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 20.94 Peers 41.86   MSFT 0.74 Peers 0.85

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.

 

Discount. 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 discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
MSFT 7.56 Peers 8.94   MSFT 73.84 Peers 55.60

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 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 6.04 Peers 6.52   MSFT 0.41 Peers 8.45

Average. 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 valuation on par with its industry on this measurement.

 

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

MSFT significantly trails its peers on the basis of sales growth

 

 

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