| 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 | $412.66 |
| P/E Ratio | 32.27 | 33.39 | 29.06 | 38.69 | 35.63 | 30.12 |
| 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 | 20.5 |
| 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 company with strong financials and a history of consistent growth. With revenues of $281.72 billion and an annualized growth rate of 12.6%, Microsoft is outpacing the industry average. The company's operating margins of 45.6% are well above the software industry average of 15.71%, indicating efficient management. Additionally, Microsoft's earnings per share have been growing at an annualized rate of 15.5% over the last 6 years, showcasing its ability to generate profits.
However, the PEG ratio of 1.79 suggests that the market may be overvaluing Microsoft's growth potential, as it is higher than the ideal value of 1. This is further supported by the company's gross margins, which are in line with the industry average. On the positive side, Microsoft has a strong track record of dividends over the last 18 years, with a current yield of 0.9%. The company also has strong free cash flows averaging $61.94 billion over the last 5 years, with a compounded average growth rate of 7.2%.
In terms of valuation, Microsoft's P/E ratio of 24.1 is lower than the industry and S&P 500 averages, indicating that the stock may be undervalued. Additionally, the forward P/E ratio of 20.9 based on earnings guidance of $19.35 per share suggests further potential for upside. Microsoft also maintains healthy leverage levels, with a Net Debt / EBITDA ratio of 0.13, well below the industry average.
On the other hand, Microsoft's Price to Book Ratio of 7.25 is higher than the sector average, indicating that investors are willing to pay a premium for the company's assets. Moreover, the current ratio of 1.39 shows that while Microsoft has enough current assets to cover its current liabilities, it does so only slightly.
