Microsoft Corporation's Buy Recommendation Affirmed

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Microsoft Corporation (Nasdaq: MSFT) has been reiterated by TheStreet Ratings as a buy with a ratings score of A-. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • MSFT's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 10.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MSFT's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.53, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, MICROSOFT CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

Microsoft Corporation (Microsoft) develops, licenses, and supports software, services, and hardware devices worldwide. Microsoft has a market cap of $270.3 billion and is part of the technology sector and computer software & services industry. Shares are up 21.5% year to date as of the close of trading on Friday.

You can view the full Microsoft Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
null

If you liked this article you might like

General Electric Is One Mega-Cap Stock You Must Still Avoid

General Electric Is One Mega-Cap Stock You Must Still Avoid

LinkedIn CEO Talks at Goldman Sachs Tech Conference: 5 Key Takeaways

LinkedIn CEO Talks at Goldman Sachs Tech Conference: 5 Key Takeaways

Oracle CEO Talks Up the Cloud at Goldman Sachs Tech Conference: 6 Key Takeaways

Oracle CEO Talks Up the Cloud at Goldman Sachs Tech Conference: 6 Key Takeaways

Apple's Stock Rally Raises a Huge Question Investors Must Consider

Apple's Stock Rally Raises a Huge Question Investors Must Consider

Google Cloud CEO Talks at Goldman Sachs Tech Conference: 8 Top Takeaways

Google Cloud CEO Talks at Goldman Sachs Tech Conference: 8 Top Takeaways