| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $143,015 | $168,088 | $198,270 | $211,915 | $245,122 | $281,724 |
| Gross Margins | 68% | 69% | 68% | 69% | 70% | 69% |
| Net Margins | 31% | 36% | 37% | 34% | 36% | 36% |
| Net Income (M) | $44,281 | $61,271 | $72,738 | $72,361 | $88,136 | $101,832 |
| Net Interest Expense (M) | $2,591 | $2,346 | $2,063 | $1,968 | $2,935 | $1,600 |
| Depreciation & Amort. (M) | $10,700 | $9,300 | $12,600 | $11,000 | $15,200 | $22,000 |
| Diluted Shares (M) | 7,616 | 7,555 | 7,473 | 7,468 | 7,468 | 7,460 |
| Earnings Per Share | $5.76 | $8.05 | $9.65 | $9.68 | $11.8 | $13.64 |
| EPS Growth | n/a | 39.76% | 19.88% | 0.31% | 21.9% | 15.59% |
| Avg. Price | $187.81 | $271.09 | $281.91 | $376.04 | $422.54 | $413.62 |
| P/E Ratio | 32.27 | 33.39 | 29.06 | 38.69 | 35.63 | 30.19 |
| Free Cash Flow (M) | $45,234 | $56,118 | $65,149 | $59,475 | $74,071 | $71,611 |
| CAPEX (M) | $15,441 | $20,622 | $23,886 | $28,107 | $44,477 | $64,551 |
| EV / EBITDA | 23.11 | 26.23 | 22.27 | 28.43 | 25.44 | 20.55 |
| Total Debt (M) | $64,272 | $61,330 | $50,865 | $52,425 | $47,219 | $43,261 |
| Net Debt / EBITDA | 0.78 | 0.51 | 0.37 | 0.35 | 0.24 | 0.13 |
| Current Ratio | 2.58 | 2.25 | 1.93 | 1.22 | 1.35 | 1.39 |
Microsoft Corporation is a potentially undervalued stock. With revenues of $281.72 billion and an annual growth rate of 12.6%, the company is showing strong financial performance. Microsoft's capital expenditures are also increasing at a rapid rate of 29.1%, indicating significant reinvestment of profits back into the business. The company's operating margins of 45.6% compare favorably with the industry average of 15.71%, while its earnings per share have grown at an annualized rate of 15.5% over the last 6 years.
However, Microsoft's PEG ratio of 1.78 is above 1, which suggests that the market may be overvaluing the firm's growth potential. Additionally, its gross margins of 69% are in line with the industry average of 63.49%. The company has a strong record of dividends over the last 18 years, with a current yield of 0.9%. Its free cash flows have averaged $61.94 billion over the last 5 years, with a compounded average growth rate of 7.2%.
Microsoft's P/E ratio of 24.6 is lower than the Technology sector average of 30.44 and the S&P 500 average of 29.3. Its earnings guidance of $19.35 per share implies a forward P/E ratio of 21.4. The company also maintains healthy leverage levels with a Net Debt/EBITDA ratio of 0.13, averaging 0.4 over the last 5 years.
On the other hand, Microsoft's Price to Book Ratio of 7.87 is higher than the sector average of 4.19. The company's current ratio of 1.39 indicates that its current assets of $180.19 billion slightly exceed its current liabilities of $130.0 billion.
