Microsoft is down -0.66

Today I will review Microsoft. I will break down why Microsoft leadership may should not consider a stake in the firm. This firm current daily volatility is 0.99 percent, with beta of 1.29 and alpha of 0.07 over S&P 500. Macroaxis considers Microsoft very steady given 1 month investment horizon. Microsoft has Sharpe Ratio of 0.3012 which conveys that the firm had 0.3012% of return per unit of risk over the last 1 month. Our philosophy towards estimating volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. We have found twenty-eight technical indicators for Microsoft which you can use to evaluate future volatility of the firm. Please exercise Microsoft Corporation Mean Deviation of 0.9423, Risk Adjusted Performance of 0.1461 and Downside Deviation of 1.18 to check out if our risk estimates are consistent with your expectations.
Published over a year ago
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Reviewed by Gabriel Shpitalnik

The company currently holds 85.48B in liabilities with Debt to Equity (D/E) ratio of 92.7 indicating the stock may have difficulties to generate enough cash to satisfy its financial obligations. Microsoft dividends can provide a clue to current valuation of the stock. The firm one year expected dividend income is about $0.82 per share. Lets now take a look at Microsoft Shares Owned by Insiders. Based on latest financial disclosure 1.41% of Microsoft Corporation are shares owned by insiders. This is 85.37% lower than that of the Technology sector, and significantly higher than that of Software - Infrastructure industry, The Shares Owned by Insiders for all stocks is 79.59% higher than Microsoft.
Microsoft financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Microsoft, including all of Microsoft's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Microsoft assets, the company is considered highly leveraged. Understanding the composition and structure of overall Microsoft debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding Microsoft Total Liabilities

Microsoft liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Microsoft has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Microsoft balance sheet include debt obligations and money owed to different Microsoft vendors, workers, and loan providers. Below is the chart of Microsoft short long-term liabilities accounts currently reported on its balance sheet.
You can use Microsoft financial leverage analysis tool to get a better grip on understanding its financial position

How important is Microsoft's Liquidity

Microsoft financial leverage refers to using borrowed capital as a funding source to finance Microsoft ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Microsoft financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Microsoft's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Microsoft's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Microsoft's total debt and its cash.

What is driving Microsoft Investor Appetite?

The latest bullish price patterns experienced by current Microsoft Corporation shareholders may encourage investors to take a closer look at the firm as it closed today at a share price of 118.38 on 15065389 in trading volume. The company executives have been very successful with rebalancing the firm components at opportune times to take advantage of market volatility in March. The stock standard deviation of daily returns for 30 days (very short) investing horizon is currently 0.9915. The very small Stock volatility is a good signal to investors with longer term investment horizons. Microsoft reports 74.60% shares owned by institutions. Microsoft is selling for under 119.31. That is 0.66 percent decrease. Today highest was 120.23. Microsoft Return on Sales is comparatively stable at the moment. Further, Microsoft Cash and Equivalents USD is comparatively stable at the moment.
 2015 2016 2017 2018 2019 (projected)
Microsoft Long Term Debt to Equity 0.57  1.05  0.87  0.79  0.57 
Microsoft Interest Coverage 59.36  26.74  67.55  77.68  238.36 
To summarize, our ongoing 'Buy/Hold/Sell' recommendation on the firm is Strong Buy. We believe Microsoft is undervalued with low odds of distress for the next two years.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Microsoft. Please refer to our Terms of Use for any information regarding our disclosure principles.

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