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After Earnings, Is Microsoft Stock a Buy, a Sell, or Fairly Valued?

The Daily Price Change displays the day’s percentage price change using the most recently completed close. A ratio of 1 means a company’s fxtm broker reviews assets are equal to its liabilities. Less than 1 means its liabilities exceed its short-term assets (cash, inventory, receivables, etc.).

This list of both classic and unconventional valuation items helps separate which stocks are overvalued, rightly lowly valued, and temporarily undervalued which are poised to move higher. The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock. It’s packed with all of the company’s key stats and salient decision making information.

Microsoft does not come cheap, but valuations do reflect the company’s strong fundamentals and its compelling growth opportunities. Microsoft’s high valuation multiples leave little room for disappointment. Its price-to-earnings ratio of 34.5 is some way above its 10-year median of 26.0. For all the talk of Microsoft’s cloud business, it’s easy to forget about the company’s other revenue sources and just how diversified the group’s revenue sources actually are. Although much of the gains occurred before the new millennium, the pace of growth has re-accelerated in recent years, particularly since Satya Nadella came to the helm. In just under eight years since he was made CEO on February 4, 2014, the company’s share price has gained more than 700%.

Furthermore, Microsoft is expected to increase its revenues and earnings per share by double-digit percentages between now and 2024. » Learn more about the best short-term investment accounts for money you need in five years or less. Take into consideration whether you may need the money you’re using to buy Microsoft stock for a more immediate need, such as a home purchase or college tuition. Our partners cannot pay us to guarantee favorable reviews of their products or services.

Price Target and Rating

We assign this segment a wide moat based on high switching costs and network effects. We believe that Microsoft Office, including both 365 and the perpetual license version, is protected by a wide moat driven by high switching costs and network effects. Together the two products account for approximately 26% of revenue and are growing in the low double-digit area. Further, capacity investments in front of demand driven by artificial intelligence will limit near-term margin expansion, which we think is an easy trade given the opportunity. Investors must wait to see how these potential catalysts play out, but analysts are generally optimistic about Microsoft’s future.

We focus our growth assumptions around Azure, Microsoft 365 E5 migration, and traction with the Power Platform for long-term value creation. We also see a new growth avenue emerging in the form of AI, where Microsoft is positioned as a clear leader. Still, that’s not a ton of growth to pay for the relatively high price of Microsoft’s stock. Sometimes, great investment opportunities are right under your nose. Consider the case of Microsoft (MSFT -1.04%) over the last five years. Time and again, Wall Street has shown investors the power of patience.

  • We assign the segment a wide moat rating based on high switching costs, network effects, and cost advantages.
  • Microsoft expects its total revenue to rise 16% to 18% year over year in the third quarter.
  • The company also continues to benefit from increased adoption of its cloud-based Office 365 offering.

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The cloud computing and software giant has delivered stellar gains so far in 2023. Could this be just the beginning?

We have lifted our fair value estimate for Microsoft stock to $360 per share from $325, and continue to view the shares as attractive. This time period essentially shows you how the consensus estimate has changed from the time of their last earnings report. Ideally, an investor would like to see a positive EPS change percentage in all periods, i.e., 1 week, what is saxo bank 4 weeks, and 12 weeks. Cash and short term investments ended 2021 at more than $130 billion. The company generated more than $60 billion in free cash flow over the past 12 months, and management has returned substantially most of it to shareholders via dividends and buybacks. Last year, Microsoft spent a total of $43 billion in shareholder distributions.

It takes the consensus sales estimate for the current fiscal year (F1) divided by the sales for the last completed fiscal year (F0) (actual if reported, the consensus if not). Return on Equity (or ROE) is calculated as income divided by average shareholder equity (past 12 months, limefx including reinvested earnings). Shareholder Equity (which is the difference between Total Assets and Total Liabilities) can be found on the Balance Sheet. The Historical Cash Flow Growth is the longer-term (3-5 year annualized) growth rate of the cash flow change.

Trading for 6p now, when will the Greatland Gold (GGP) share price take off?

Gartner is even more optimistic; the research company believes AI can help to create nearly $4 trillion in business value by 2022. Microsoft is investing aggressively in AI technology and has become a leader in this important, emerging field. In turn, Microsoft is well positioned to profit as artificial intelligence is embraced by the global economy in the coming decade. The 52 Week Price Change displays the percentage price change over the most recently completed 52 weeks (260 trading days). The 4 Week Price Change displays the percentage price change for the most recently completed 4 weeks (20 trading days). The Projected Sales Growth (F1/F0) looks at the estimated growth rate for the current year.

MSFT Company Calendar

Viatris won’t deliver jaw-dropping growth like Jushi, or even double-digit annual sales upside like Exelixis. But with a steadiness to generic-drug demand and an improving balance sheet, Viatris’ forward price-to-earnings ratio below 4 simply doesn’t do its stock justice. Also, Microsoft ranks second out of six stocks in IBD’s Computer Software-Desktop industry group. The desktop software group ranks No. 26 out of 197 industry groups that IBD tracks. Choosing highly rated stocks from leading industry groups in a confirmed stock market uptrend generally increases your chances of making profits in growth stocks. Bill Gates and Paul Allen started Microsoft in 1975 at the dawn of the personal computer era to make PC operating system software.

In January, Microsoft announced a new investment, reportedly worth $10 billion, in artificial intelligence startup OpenAI. OpenAI is the organization behind text generator ChatGPT and image generator Dall-E. Microsoft lately has been promoting its efforts to infuse artificial intelligence into its software and services. Overall enterprise spending on cloud infrastructure services reached $72.4 billion in the second quarter, up 16% year over year, Canalys said.

About MarketBeat

This includes Windows Commercial, Windows cloud services, and Windows Internet of Things. The company’s overall gross margin remains robust at 70% translating effectively into an operating margin of 43%. The primary factor that helped Microsoft’s stock growth over the years, despite the above factors, is its earnings growth.

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