Microsoft Corporation(MSFT) - Stock detail

Microsoft Corporation

US
MSFT
Microsoft Corporation(Listing date: 03/13/1986)

Microsoft Corporation was founded on April 4, 1975. The company develops and supports software, services, devices, and solutions to deliver new value to customers and help people and businesses realize their full potential. It offers a range of services, including cloud-based solutions that provide customers with software, services, platforms, and content, as well as solution support and consulting services. The company also delivers relevant online advertising to a global audience. Its products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; and video games. The company also designs, manufactures, and sells devices, including personal computers, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories.

🎯 Microsoft Corporation (MSFT) 💰 Analysis Report 📅 Generated: 2026-06-11 17:41:07 ET

📅 Financial Report Periods Used in Analysis

  1. 2026-03-31
  2. 2025-12-31
  3. 2025-09-30
  4. 2025-06-30
  5. 2025-03-31

Note: A total of 5 financial reports were used for financial analysis. Based on the provided real data, here is a detailed fundamental analysis of Microsoft Corporation (Stock Symbol: MSFT).

1. Company Basic Information Analysis

Microsoft Corporation (MSFT) is a global technology leader founded in 1975 and publicly listed in 1986. The company’s core business involves developing and supporting software, services, devices, and solutions. Its operations are segmented into Productivity and Business Processes (e.g., Microsoft 365, Teams), Intelligent Cloud (e.g., Azure), and More Personal Computing (e.g., Windows, Xbox). As of the latest data, it employs approximately 228,000 people. The company is a dominant player in the Software - Infrastructure sector within the Technology industry, characterized by high barriers to entry, recurring revenue models, and significant growth driven by cloud computing and AI adoption.

2. Financial Condition Assessment

The company’s financial health is robust, as evidenced by the following metrics derived from the latest quarterly report (2026-03-31):

  • Liquidity: The Current Ratio of 1.28 and Quick Ratio of 1.27 indicate the company has sufficient short-term assets to cover its short-term liabilities, though the margin is not excessively high, which is typical for a mature tech company with efficient cash management.
  • Solvency: A Debt-to-Asset Ratio of 40.31% shows a moderate level of leverage. This balance allows Microsoft to fund growth and strategic investments (like AI infrastructure) while maintaining a strong, investment-grade credit profile. The risk of financial distress is very low.
  • Profitability & Cash Flow Implication: The exceptionally high Net Margin of 40.52% (Q3 2026) and strong, growing cash flows from operations (implied by high profits) provide immense financial flexibility. This allows for significant capital expenditures, shareholder returns (dividends and buybacks), and strategic acquisitions without straining the balance sheet.

3. Profitability Analysis

Microsoft demonstrates exceptional and improving profitability:

  • Growth Trajectory: Revenue growth remains strong, with a 17.80% year-over-year increase in the latest quarter. This acceleration from the 14.93% annual growth reported in June 2025 suggests successful monetization of its cloud and AI offerings.
  • Margin Strength: The company operates with a very high Gross Margin of 68.22%, indicative of its powerful software-based business model with low incremental costs. More impressively, its Net Margin has expanded to 40.52%, up from 36.15% in the prior annual report, showcasing superior operational efficiency and pricing power.
  • Return on Capital: The Return on Equity (ROE) of 33.87% (TTM) and Return on Assets (ROA) of 19.05% (TTM) are outstanding. These figures demonstrate that management is highly effective at generating profits from both shareholder equity and total assets, far exceeding typical industry and market averages.

4. Valuation Analysis (in US Dollar $)

Using the provided real-time and TTM data:

  • Current Price: $390.34 (as of 2026-06-11 close).
  • Price-to-Earnings (P/E): The Forward P/E is 31.61 (dynamic), while the Trailing P/E (TTM) is 24.19. The forward multiple reflects market expectations for continued high earnings growth.
  • Price-to-Book (P/B): 7.31. This is high in an absolute sense but justified by the company’s extraordinary ROE (~34%). The market is valuing its ability to generate profits, not just its asset base.
  • Price-to-Sales (P/S): 9.11 (TTM). This premium multiple is supported by the company’s industry-leading margins and growth profile.
  • PEG Ratio Consideration: While an explicit PEG is not provided, a P/E of ~25-31 alongside a revenue growth rate of ~18% and net profit growth exceeding 30% suggests a PEG ratio likely below 1.0, which traditionally indicates growth is not fully priced in.
  • Recent Price Context: The stock has traded between approximately $356.51 and $466.32 over the last 60 days. The current price near $390 is towards the lower end of this recent range, following a pullback from peaks above $460.
  • Verdict on Valuation: Given the stellar profitability metrics (ROE >33%, Net Margin >40%), strong double-digit growth in both revenue and earnings, and dominant competitive position, Microsoft’s premium valuation multiples (P/E ~25-31, P/S ~9) are justified. The stock is not cheap on an absolute basis, but it is fairly valued relative to its quality and growth prospects. A significant discount would be unwarranted.

Fundamental-Based Target Price Ranges:

  • Base Case (12-month): Applying a P/E multiple of 28-30 to the TTM Diluted EPS of approximately $13.64 (annualized from recent quarters) yields a target range of $382 - $409. This represents a modest upside from the current price.
  • Growth Case (12-month): Factoring in continued earnings growth of 15-20% to arrive at a forward EPS estimate of ~$15.70 - $16.40, and applying a P/E of 28-30, suggests a target range of $440 - $492. This scenario is plausible given the company’s momentum.
  • Reasonable Price Range: Synthesizing the above, a reasonable 12-month fundamental price range for MSFT is $420 - $470.

5. Investment Recommendation

Recommendation: Buy

Rationale: Microsoft Corporation (MSFT) presents a compelling investment case based on its fundamental strength. The company exhibits a powerful combination of high growth (revenue +18%), exceptional profitability (ROE ~34%, Net Margin >40%), and robust financial health (moderate leverage, strong liquidity). While its current valuation multiples are premium, they are supported by its quality and market position. The recent pullback in price from highs above $460 to around $390 provides a more attractive entry point. The fundamental target range of $420-$470 suggests a potential upside of approximately 8-20% from the current level. Risks include increased competition in cloud/AI, regulatory scrutiny, and a broader market downturn. However, the company’s durable competitive advantages and financial fortitude mitigate these risks. Therefore, a Buy rating is warranted for long-term investors. ✅ Analysis Complete