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Company Analysis

Microsoft Corporation MSFT

A comprehensive view of key metrics, scores, and financial health for Microsoft Corporation

Overview of Microsoft Corporation

MSFT NMS
Technology Software - Infrastructure Framework: Software & SaaS Mega Cap
Microsoft Corporation (MSFT), is a Mega Cap company, in the Software - Infrastructure industry, last closed at $507.12, about 57.1% overvalued vs fair value, +2.0% 1Y return, placing in the top 25% of its sector.
Metrics P/E 20.8× Rev Growth 17.8% ROE 34.0% Gross Margin 67.9% Div Yield 0.95%
USD 507.12
-2.83%
(Delayed)
• Vol 90d: 35.0%
52-Week Range
Market Cap
$3.77T
Enterprise Value
$3.79T
Overall Score
View breakdown
Overall
Growth
Good
Profitability
Excellent
Health
Fair
Efficiency
Fair
Valuation
Good
Growth
Good
Profitability
Excellent
Health
Fair
Efficiency
Fair
Valuation
Good
Completeness: 100%
Confidence: 98%
Updated: Oct 31
Top Beats

Quick Facts

Website https://www.microsoft.com
HQ Redmond, WA
Employees 228,000
Fiscal year Jun 30

Next Events

Dividend Dec 10 Ex-div: Nov 19
Earnings Jan 27 Estimated

Fair Value Snapshot

Bear Base Bull
$201
$218
$237
Current: $507.12 -57% vs base

Engine Room Money Flow™

Mega Cap

Software & SaaS - Where revenue goes and how value is created

Flow Steps
Total Revenue
$331.8B
17.8%%
Gross Profit
$225.5B
16.3%%
Operating Income (GAAP)
$155.2B
20.8%%
Operating Cash Flow
$182.9B
34.4%%
Free Cash Flow
$67.0B
-6.5%%
Capital Allocation
-$48.7B
Money Flow Bridge
Flow Direction: Money moves from left to right
Components: Breakdown shows composition of each stage
Industry-Specific: Software & SaaS

Quality & Reliability Indicators

Gross Margin
67.9%
Good

Gross Profit / Revenue — pricing power and product moat (SaaS benchmark: >70%)

FCF Margin FY2026
20.2%
Excellent

Free Cash Flow / Revenue

Free Cash Flow / Revenue — primary investor metric for software companies

Rule of 40
38.0
Fair

Revenue Growth (%) + FCF Margin (%) — SaaS health score: ≥40 healthy, ≥60 elite

SBC % of Revenue
3.7%
Excellent

Stock-Based Compensation / Revenue — real dilution cost excluded from GAAP FCF; 5–15% typical for growth SaaS

R&D Intensity
10.7%
Good

R&D Expense / Revenue — growth investment intensity (10–25% typical for SaaS)

Operating Margin (GAAP)
46.8%
Excellent

Operating Income / Revenue — GAAP profitability; negative is common for high-growth SaaS

FCF Yield
1.8%
Fair

Free Cash Flow / Market Cap — investor return potential

Owner's Pocket - Capital Allocation

Total Returned to Shareholders

Combined dividends, buybacks, and debt reduction

$48.7B
72.7% of FCF
Dividends
$26.4B
% of FCF 39.5%
Buybacks
$22.3B
% of FCF 33.2%

Where It Leaks

Cash Flow Health critical
Significant cash flow inefficiencies identified. Multiple high-impact leaks require attention.
3
Active Leaks
0/3
Improving
0
High Impact
1
Critical
Key Insights

Key concerns identified: CapEx Hunger

Moat Analysis Software & SaaS Specialized

Competitive Advantage Assessment

Evaluating Microsoft Corporation's durable competitive advantages across 6 defense dimensions

Overall Moat Strength
73
/100
Moderate
Scores based on quantitative metrics and qualitative factors
Full moat analysis

Key strengths

  • Premium Software Margins Gross margin quality is strong versus peers (score 0.79), consistent with premium software economics.
  • Asset-Light Returns Return profile is strong (score 0.88), supporting a capital-efficient model.

Key risks

  • FCF Trend Is Softening FCF trend is weak (score 0.20), suggesting cash scalability is deteriorating.

The dashed ring is the peer median. Defense scores are percentile ranks against peers, so 50 is roughly the typical company in this group.

Select any axis label to open that defense below.

Pricing Power

Strong
85

Ability to sustain premium gross margins and defend profitability against competition

Key signals
Gross Margin Quality 79/100
Operating Margin
46.8% vs 0.5% median P99
Gross Profit Margin
67.9% vs 59.4% median P59
Margin Durability 95/100
Operating Margin
— vs 13.4% median
STRENGTHS
  • Premium Software Margins Gross margin quality is strong versus peers (score 0.79), consistent with premium software economics.
  • Margins Hold Through Cycles Margin durability is strong (score 0.95), pointing to resilient pricing power.

Evidence that customers renew, expand, and keep revenue streams predictable

Key signals
Revenue Consistency 86/100
Rev Growth YoY
— vs 17.1% median
Contracted Demand 60/100
Revenue CAGR 3Y
16.1% vs 11.3% median P62
Def Rev Growth
12.6% vs 9.0% median P58
STRENGTHS
  • Consistent Subscription Growth Revenue consistency is strong (score 0.86), pointing to a sticky customer base.
  • Deferred Revenue Momentum Contracted demand signals are healthy (score 0.60), consistent with recurring revenue strength.

Capacity to reinvest in product development without losing the growth-profit balance

Key signals
R&D Commitment 64/100
R&D Intensity
10.7% vs 18.5% median P69
Rev Growth YoY
17.8% vs 13.2% median P59
Innovation Payoff 66/100
Revenue CAGR 3Y
16.1% vs 11.3% median P62
Rule of 40
38.0% vs 23.6% median P71
STRENGTHS
  • R&D Reinvestment Supports Growth R&D commitment is strong relative to peers (score 0.64).
  • Innovation Converts to Outcomes Innovation payoff is strong (score 0.66), supported by Rule of 40 and revenue compounding.

Ability to translate revenue growth into durable operating and free cash flow

Key signals
Cash Conversion 88/100
FCF Margin
20.2% vs 7.8% median P78
Operating Cash Flow Margin
55.1% vs 12.8% median P98
FCF Trend 20/100
FCF Margin
— vs 2.5% median
STRENGTHS
  • Revenue Converts Cleanly to Cash Cash conversion is strong (score 0.88), showing scalable economics.
RISKS
  • FCF Trend Is Softening FCF trend is weak (score 0.20), suggesting cash scalability is deteriorating.

Returns generated by an asset-light platform without relying on leverage

Key signals
Return Profile 88/100
ROE
34.0% vs 2.2% median P85
ROIC
26.1% vs 1.1% median P91
Return Durability 85/100
ROIC
— vs 10.4% median
STRENGTHS
  • Asset-Light Returns Return profile is strong (score 0.88), supporting a capital-efficient model.
  • Returns Hold Over Time Return durability is healthy (score 0.85), indicating durable capital efficiency.

Capacity to keep investing through downturns without balance sheet stress

Key signals
Debt Capacity 84/100
Interest Coverage (EBIT)
55.39x vs -0.72x median P94
Cash Flow to Debt Ratio
1.27x vs 0.52x median P75
Liquidity Position 47/100
Current Ratio
1.23x vs 1.63x median P34
Net Debt/EBITDA
0.09x vs 0.80x median P59
STRENGTHS
  • Debt Covered by Cash Generation Debt capacity is solid (score 0.84), supporting resilience through cycles.

Trade-Off Ledger™

Where management spends the performance budget - Growth, Profitability, or Safety

Software SaaS vs Industry Peers 100% Coverage
Trade-Off Triangle Visualization A ternary plot showing MSFT's balance between Growth (31.2%), Profitability (40.6%), and Safety (28.2%). Growth 31% Safety 28% Profitability 41%

Click axes to expand details. Marker shows current allocation.

Loading 3-year trend analysis...

Growth

61th percentile vs peers
61
Key Signals
Rev Growth YoY 17.8% 67p Revenue CAGR 3Y 16.1% 68p Def Rev Growth 12.6% 60p Buyback % -0.1% 67p EPS Growth YoY 31.6% 52p
Strengths
  • Interest Coverage Ratio in top 20% of peers (55.39, 89th percentile)
  • Superior capital returns - 2 return metrics above peer median
  • Growth above peer median with strong metric coverage (100%)
  • Operating Cash Flow Margin in top 20% of peers (55.1%, 97th percentile)
Risks

No significant risks identified for this axis.

Two Futures

Scenario-based fair value ranges for Microsoft Corporation.

User assumptions applied -
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This company cannot be valued using standard models.

What this means: The Scenario Theatre requires financial data (revenue, cash flow, shares outstanding) to calculate fair value estimates. This data may be unavailable for:

  • Recently listed companies (IPOs, SPACs)
  • Shell companies or holding companies
  • Companies that haven't filed recent financials
  • Foreign companies with limited data coverage
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