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Microsoft Corp MSFT

Morningstar Rating
$376.42 −2.45 (0.65%)
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Company Report

Microsoft Earnings: All Segments Are Good, With Azure Expected to Remain Strong Throughout 2024

Wide-moat Microsoft reported solid first-quarter results, including meaningful upside on both the top and bottom lines. We see modest improvement in the demand environment on the commercial side, with Azure strength, modest AI contributions, an easing of cloud optimization efforts by clients, and persistently solid execution. We’re also encouraged by Microsoft’s outlook, especially consistent Azure growth in excess of 25% throughout the year. Guidance includes Activision, which adds more than $6 billion in revenue to our estimates but pressures margins in the near term. These factors drive us to raise our fair value estimate to $370 from $360. We continue to see shares as modestly undervalued, dancing between 3 and 4 stars.

Price vs Fair Value

MSFT is trading at a 2% premium.
Price
$378.84
Fair Value
$267.00
Uncertainty
Medium
1-Star Price
$782.60
5-Star Price
$765.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Public cloud is widely considered to be the future of enterprise computing, and Azure is a leading service that benefits the evolution to first to hybrid environments, and then ultimately to public cloud environments.

Bears

Momentum is slowing in the ongoing shift to subscriptions, particularly in Office, which is generally considered a mature product.

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News

Trading Information

Previous Close Price
$378.87
Day Range
$375.86380.06
52-Week Range
$219.37384.25
Bid/Ask
$376.41 / $376.48
Market Cap
$2.80 Tril
Volume/Avg
9.4 Mil / 23.9 Mil

Key Statistics

Price/Earnings (Normalized)
36.25
Price/Sales
12.96
Dividend Yield
0.74%
Dividend Yield (Forward)
0.79%
Total Yield
1.43%

Company Profile

Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).
Sector
Technology
Industry
Software - Infrastructure
Stock Style Box
Large Growth
Total Number of Employees
221,000

Competitors

Valuation

Metric
MSFT
CRM
GOOGL
Price/Earnings (Normalized)
36.2532.3324.92
Price/Book Value
12.763.846.20
Price/Sales
12.966.685.82
Price/Cash Flow
29.2218.9417.33
Price/Earnings
MSFT
CRM
GOOGL

Financial Strength

Metric
MSFT
CRM
GOOGL
Quick Ratio
1.450.861.87
Current Ratio
1.661.022.04
Interest Coverage
46.9111.62229.08
Quick Ratio
MSFT
CRM
GOOGL

Profitability

Metric
MSFT
CRM
GOOGL
Return on Assets (Normalized)
21.73%7.24%23.46%
Return on Equity (Normalized)
43.59%11.63%33.51%
Return on Invested Capital (Normalized)
32.22%9.65%29.26%
Return on Assets
MSFT
CRM
GOOGL

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