Microsoft Valuation

MSFT Stock  USD 425.34  5.13  1.22%   
At this time, the firm appears to be overvalued. Microsoft secures a last-minute Real Value of $382.81 per share. The latest price of the firm is $425.34. Our model forecasts the value of Microsoft from analyzing the firm fundamentals such as Current Valuation of 3.19 T, profit margin of 0.36 %, and Return On Equity of 0.38 as well as examining its technical indicators and probability of bankruptcy. In general, most investors recommend acquiring undervalued stocks and selling overvalued stocks since, at some point, asset prices and their ongoing real values will merge together. Key fundamental drivers impacting Microsoft's valuation include:
Price Book
12.4466
Enterprise Value
3.1 T
Enterprise Value Ebitda
24.5857
Price Sales
13.031
Forward PE
29.9401
Overvalued
Today
425.34
Please note that Microsoft's price fluctuation is very steady at this time. Calculation of the real value of Microsoft is based on 3 months time horizon. Increasing Microsoft's time horizon generally increases the accuracy of value calculation and significantly improves the predictive power of the methodology used.
Our valuation method for Microsoft is useful when determining the fair value of the Microsoft stock, which is usually determined by what a typical buyer is willing to pay for full or partial control of Microsoft. Since Microsoft is currently traded on the exchange, buyers and sellers on that exchange determine the market value of Microsoft Stock. However, Microsoft's intrinsic value may or may not be the same as its current market price, in which case there is an opportunity to profit from the mispricing, assuming the market price will eventually merge with its intrinsic value.
Historical Market  425.34 Real  382.81 Target  392.34 Hype  425.34 Naive  430.83
The real value of Microsoft Stock, also known as its intrinsic value, is the underlying worth of Microsoft Company, which is reflected in its stock price. It is based on Microsoft's financial performance, assets, liabilities, growth prospects, management team, or industry conditions. The intrinsic value of Microsoft's stock can be calculated using various methods such as discounted cash flow analysis, price-to-earnings ratio, or price-to-book ratio. That value may differ from its current market price, which is determined by supply and demand factors such as investor sentiment, market trends, news, and other external factors that may influence Microsoft's stock price. It is important to note that the real value of any stock may change over time based on changes in the company's performance.
381.54
Downside
382.81
Real Value
467.87
Upside
Estimating the potential upside or downside of Microsoft helps investors to forecast how Microsoft stock's addition to their portfolios will impact the overall performance. We also use other valuation drivers to help us estimate the true value of Microsoft more accurately as focusing exclusively on Microsoft's fundamentals will not take into account other important factors:
Earnings
Estimates (0)
LowProjectedHigh
2.932.933.05
Details
Hype
Prediction
LowEstimatedHigh
424.07425.34426.61
Details
Potential
Annual Dividend
LowForecastedHigh
1.811.821.83
Details
57 Analysts
Consensus
LowTarget PriceHigh
357.03392.34435.50
Details
Traditionally analysts and sophisticated investors use multiple methods for valuing a cash-flow-generating entity or its stock. For example, some money managers use Microsoft's intrinsic value based on its ongoing forecasts of Microsoft's financial statements. In contrast, other private, professional wealth advisors use a multiplier approach by looking to relative value analysis against Microsoft's closest peers. When choosing an evaluation method for Microsoft, ensure it is appropriate for the firm given its current financial situation and market classification. If more than one evaluation category is relevant, we suggest using both methods to arrive at a better estimate.

Microsoft Investments

(24.78 Billion)

Microsoft Valuation Trend

Knowing Microsoft's actual value is paramount for traders to make sound investment determinations. Microsoft's real value is not only important for the investor to make better decisions but also for a more accurate overall view of Microsoft's financial worth over time since having this information enables investors and analysts to forecast the earnings more efficiently. Using both Microsoft's enterprise value as well as its market capitalization is the best way to gauging the value of the company and is usually enough for investors to make market timing descisions.

Microsoft Market Cap

Microsoft is considered to be number one stock in market capitalization category among related companies. Market capitalization of Information Technology industry is now estimated at about 4.11 Trillion. Microsoft totals roughly 3.16 Trillion in market capitalization claiming about 77% of equities under Information Technology industry.
Capitalization  Valuation  Revenue  Total debt  Workforce

Microsoft Valuation Ratios as Compared to Competition

Comparative valuation techniques use various fundamental indicators to help in determining Microsoft's current stock value. Our valuation model uses many indicators to compare Microsoft value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Microsoft competition to find correlations between indicators driving Microsoft's intrinsic value. More Info.
Microsoft is regarded fourth in price to earning category among related companies. It is rated below average in price to book category among related companies fabricating about  0.47  of Price To Book per Price To Earning. The ratio of Price To Earning to Price To Book for Microsoft is roughly  2.14 . Price To Book Ratio is likely to drop to 9.01 in 2024. Comparative valuation analysis is a catch-all model that can be used if you cannot value Microsoft by discounting back its dividends or cash flows. This model doesn't attempt to find an intrinsic value for Microsoft's Stock. Still, instead, it compares the stock's price multiples to a benchmark or nearest competition to determine if the stock is relatively undervalued or overvalued. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Microsoft's earnings, one of the primary drivers of an investment's value.

Microsoft's Earnings Breakdown by Geography

Please note that valuation analysis is one of the essential comprehensive assessments in business. It evaluates Microsoft's worth, which you can determine by considering its current assets, liabilities and future cash flows. The investors' valuation analysis is an important metric that will give you a perspective on different companies. It helps you know the worth of the potential investment in Microsoft and how it compares across the competition.

About Microsoft Valuation

The stock valuation mechanism determines the current worth of Microsoft on a weekly basis. We use both absolute as well as relative valuation methodologies to arrive at the intrinsic value of Microsoft. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Microsoft based exclusively on its fundamental and basic technical indicators. By analyzing Microsoft's financials, quarterly and monthly indicators, and its related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Microsoft's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Microsoft. We calculate exposure to Microsoft's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Microsoft's related companies.
Last ReportedProjected for Next Year
Gross Profit168 B176.4 B
Pretax Profit Margin 0.48  0.42 
Operating Profit Margin 0.48  0.40 
Net Profit Margin 0.31  0.22 
Gross Profit Margin 0.79  0.87 

8 Steps to conduct Microsoft's Valuation Analysis

Company's valuation is the process of determining the worth of any company in monetary terms. It estimates Microsoft's potential worth based on factors such as financial performance, market conditions, growth prospects, and overall economic environment. The result of company valuation is a single number representing a Company's current market value. This value can be used as a benchmark for various financial transactions such as mergers and acquisitions, initial public offerings (IPOs), or private equity investments. To conduct Microsoft's valuation analysis, follow these 8 steps:
  • Gather financial information: Obtain Microsoft's financial statements, including balance sheets, income statements, and cash flow statements.
  • Determine Microsoft's revenue streams: Identify Microsoft's primary sources of revenue, including products or services offered, target markets, and pricing strategies.
  • Analyze market data: Research Microsoft's industry and market trends, including the size of the market, growth rate, and competition.
  • Establish Microsoft's growth potential: Evaluate Microsoft's management, business model, and growth potential.
  • Determine Microsoft's financial performance: Analyze its financial statements to assess its historical performance and future potential.
  • Choose a valuation method: Consider the Company's specific circumstances and choose an appropriate valuation method, such as the discounted cash flow (DCF) or comparable analysis method.
  • Calculate the value: Apply the chosen valuation method to the financial information and market data to calculate Microsoft's estimated value.
  • Review and adjust: Review the results and make necessary adjustments, considering any relevant factors that may have been missed or overlooked.
Note: This is a general outline, and different approaches and methods may be used depending on the type and size of the company being valued. We also recomment to seek professional assistance to ensure accuracy.
Microsoft's stock price is the clearest measure of market expectations about its performance. Without stock valuation, investors cannot independently discern whether Microsoft's value is low or high relative to the company's performance and growth projections. Determining the market value of Microsoft can be done in different ways, such as multiplying its stock price by its outstanding shares.
A single share of Microsoft represents a small ownership stake in the entity. As a stockholder of Microsoft, your percentage of company ownership is determined by dividing the number of shares you own by the total number of shares outstanding and then multiplying that amount by 100. Owning stock in a company generally confers both corporate voting rights and income from any dividends paid to the stock owner.

Microsoft Dividends Analysis For Valuation

At this time, Microsoft's Dividends Paid is comparatively stable compared to the past year. Dividend Payout Ratio is likely to gain to 0.32 in 2024, whereas Dividend Yield is likely to drop 0.01 in 2024. . At this time, Microsoft's Retained Earnings are comparatively stable compared to the past year. Retained Earnings Total Equity is likely to gain to about 101.8 B in 2024, whereas Price Earnings Ratio is likely to drop 31.86 in 2024.
Last ReportedProjected for Next Year
Dividends Paid22.8 B23.9 B
Dividend Yield 0.01  0.01 
Dividend Payout Ratio 0.25  0.32 
Dividend Paid And Capex Coverage Ratio(12.12)(12.73)
There are various types of dividends Microsoft can pay to its shareholders, and the actual value of the dividend is determined on a per-share basis. It is to be paid equally to all of Microsoft shareholders on a specific date, known as the payable date. The cash dividend is the most common type of dividend payment - it is the payment of actual cash from Microsoft directly to its shareholders. There are other types of dividends that companies can issue, such as stock dividends or asset dividends. When Microsoft pays a dividend, it has no impact on its enterprise value. It does, however, lowers the Equity Value of Microsoft by the value of the dividends paid out.

Microsoft Growth Indicators

Growth stocks usually refer to those companies expected to grow sales and earnings faster than the market average. Growth stocks typically don't pay dividends, often look expensive, and usually trading at a high P/E ratio. Nevertheless, such valuations could be relatively cheap if the company continues to grow, which will drive the share price up. However, since most investors are paying a high price for a growth stock, based on expectations, if those expectations are not fully realized, growth stocks can see dramatic declines. Note, investing in growth stocks can be very risky. If the company such as Microsoft does not do well, investors take a loss on the stock when it is time to sell. Also, because growth stocks typically do not pay dividends, the only opportunity an investor has to make money on their investment is when they eventually sell their shares.
Common Stock Shares Outstanding7.5 B
Quarterly Earnings Growth Y O Y0.2
Forward Price Earnings29.9401

Microsoft Current Valuation Indicators

Valuation refers to the process of determining the present value of Microsoft and all of its assets. It can be calculated using a number of techniques. As many analysts who try to value Microsoft we look at many different elements of the entity such as Microsoft's management, its prospective future earnings, the current market value of the company's assets, as well as its capital structure formation. Microsoft's valuation analysis is also a process of estimating the intrinsic value of all assets and outstanding equities. There are different methodologies and models we use to develop the final Microsoft's valuation. The techniques such as discounted cash flow and fundamental indicators such as book value per share or market capitalization are well known and widely used across most financial advisers and money managers.
Valuations are an essential part of business, for companies themselves, but also for investors. For companies, such as Microsoft, valuations can help measure their progress and success and can help them track their performance in the market compared to others. In addition, investors can use Microsoft's valuations to help determine the worth of potential investments. They can do this by using data and information made public by a company. Regardless of who the valuation is for, it essentially describes Microsoft's worth.
When determining whether Microsoft is a good investment, qualitative aspects like company management, corporate governance, and ethical practices play a significant role. A comparison with peer companies also provides context and helps to understand if Microsoft Stock is undervalued or overvalued. This multi-faceted approach, blending both quantitative and qualitative analysis, forms a solid foundation for making an informed investment decision about Microsoft Stock. Highlighted below are key reports to facilitate an investment decision about Microsoft Stock:
Check out Correlation Analysis to better understand how to build diversified portfolios, which includes a position in Microsoft. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in census.
For more information on how to buy Microsoft Stock please use our How to Invest in Microsoft guide.
Note that the Microsoft information on this page should be used as a complementary analysis to other Microsoft's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

Complementary Tools for Microsoft Stock analysis

When running Microsoft's price analysis, check to measure Microsoft's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Microsoft is operating at the current time. Most of Microsoft's value examination focuses on studying past and present price action to predict the probability of Microsoft's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Microsoft's price. Additionally, you may evaluate how the addition of Microsoft to your portfolios can decrease your overall portfolio volatility.
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Is Microsoft's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Microsoft. If investors know Microsoft will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Microsoft listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.2
Dividend Share
2.93
Earnings Share
11.56
Revenue Per Share
31.834
Quarterly Revenue Growth
0.17
The market value of Microsoft is measured differently than its book value, which is the value of Microsoft that is recorded on the company's balance sheet. Investors also form their own opinion of Microsoft's value that differs from its market value or its book value, called intrinsic value, which is Microsoft's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Microsoft's market value can be influenced by many factors that don't directly affect Microsoft's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Microsoft's value and its price as these two are different measures arrived at by different means. Investors typically determine if Microsoft is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Microsoft's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.