Microsoft shares declined -17.15% over the last 52 weeks, with a high of $312.88 and a low of $212.3. During this time, the stock lagged the S&P 500 index by -7.71%. As of January 2022, the company's 50-day average price is $246.53. Microsoft Corporation is an American multinational technology company which produces computer software, consumer electronics, personal computers, and related services. The large-cap Technology company is based in Redmond, WA. Microsoft has returned a 1.09% dividend yield over the last 12 months.
Exceptional EPS Growth with Low Leverage Levels:
| 2019-06-30 | 2020-06-30 | 2021-06-30 | 2022-06-30 | |
|---|---|---|---|---|
| Revenue (MM) | $123,495 | $140,503 | $165,936 | $196,109 |
| Revenue Growth | n/a | 13.77% | 18.1% | 18.18% |
| Gross Margins | 67.15% | 68.99% | 69.82% | 69.16% |
| Gross Margins Growth | n/a | 2.74% | 1.2% | -0.95% |
| Operating Margins | 34.79% | 37.69% | 42.13% | 42.52% |
| Operating Margins Growth | n/a | 8.34% | 11.78% | 0.93% |
| Earnings Per Share | $5.13 | $5.85 | $8.15 | $9.75 |
| EPS Growth | n/a | 14.04% | 39.32% | 19.63% |
| Diluted Shares (MM) | 7,643 | 7,571 | 7,519 | 7,464 |
| Free Cash Flow (MM) | $38,260 | $45,234 | $56,118 | $65,149 |
| FCF Growth | n/a | 18.23% | 24.06% | 16.09% |
| Capital Expenditures (MM) | $13,925 | $15,441 | $20,622 | $23,886 |
| Net Debt / EBITDA | 1.26 | 0.92 | 0.68 | 0.43 |
Microsoft Is Reasonably Valued:
Compared to the Technology sector's average of 27.16, Microsoft has a trailing twelve month P/E ratio of 27.52 and, according to its EPS guidance of 10.74, an expected P/E ratio of 23.06.
Microsoft's P/B ratio is 11.05 compared to its sector average of 6.23. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 322.52% above their fair value as expressed by Benjamin Graham's formula:
√(22.5 * 5-year average EPS * book value per share) = √(22.5 * 6.21 * 24.59) = $58.62
Microsoft's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.
Microsoft Is the Subject of Mixed Market Indicators:
45 analysts are following Microsoft and have set target prices ranging from $212.0 to $348.0 per share. On average, they have given the company a rating of buy. At the current price of $247.68, MSFT is trading -13.47% away from its average analyst target price of $286.24 per share, implying an analyst consensus of some upside potential for the stock.
