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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Microsoft Corporation (XNAS:MSFT) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MSFT
Name:
MICROSOFT CORPORATION (XNAS:MSFT)
Sector:
18.73B
Industry:
Software�Infrastructure
CEO:
Mr. Satya Nadella
Total Employees:
221,000
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 378.38% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MICROSOFT CORPORATION(MSFT) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�INFRASTRUCTURE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
256.06
One Month Price Target:
$257.42
Six Month Price Target :
$264.22
Likely Price in One Year's Time:
Ticker:
$272.38
Likely Trading Range Today Under (Normal Volatility)
$255.38
Price Upper limit ($) :
$257.25
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$245.05
This week:
$231.43
This month :
$206.8
Other Primary facts
Market Cap:
1888.71B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
7.46B
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.22%
-14.74%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$307.11
$283.33
$205.01
$228.79
Medium risk (<10%) entry points
Buy Call
Sell Call
$275.59
Buy Put:
Sell Put:
$270.51
$236.47
$241.61
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MSFT
Sharpe Ratio:
4.22%
Comparison:
MSFT, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 157.90% higher than the industry
& ratio is 84.99% higher than the market/S&P 500 average
Average Returns/Yield of
MSFT
Daily returns:
0.10%
Weekly returns:
0.50%
Monthly returns:
1.98%
Yearly returns:
14.38%
Comparison of returns:
Average annual returns/yield (last 3 years) is 65.52% above industry average
Classification:
MSFT, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.95
Statistical test of Returns:
MSFT has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.14%
Weekly Volatility:
4.79%
Monthly Volatility:
9.58%
Yearly Volatility:
33.19%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.56%
Volatility in last five trading days has been -73.92% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.30%
Weekly VaR:
-9.62%
Monthly VaR:
-19.24%
How Much Can the price of
MSFT
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-66.64%
This translates to price declining to:
$215.42
This translates to price declining to:
$85.43
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
MSFT is a 35.77% riskier investment compared to the market/S&P 500 & is 16.31% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -35.69% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MSFT
Beta in relation to market/S&P 500--0.95
Expected beta in 1 year's time:
0.686
Expected beta in 3 year's time:
0.971
Unlevered (debt free) Beta:
0.704
Beta in relation to Nasdaq (XNAS):
1.055
Beta in relation to all global stocks::
0.798
Beta Comparison & Analysis
Beta of competitors/peers::
1.182
Beta is -19.77% lower than peers
Average Industry Beta:
1.112
Beta is -14.69% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
36.35%
Sustainable growth rate is -90.17% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.142
Alpha is 291.42% above industry average alpha yield
Alpha is 901% higher than market/& is unsustainably high
Analysis of Cost of Capital of
MSFT
Equity cost of capital:
0.096
Equity cost of capital is -10.39% below industry mean WACC
Unlevered (without debt) cost of capital:
7.16%
Before-tax cost of debt:
3.35%
After-tax cost of debt:
2.64%
Overall debt rating:
High AA grade (second highest grade)
Weighted average cost of capital (WACC):
2.64%
WACC is 10.47% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$25.82
Revenue growth rate per share of (3Y):
12.57
Annual revenue growth rate is -24.03% below industry average
EPS:
$9.58
Expected Annual growth rate of EPS (3Y):
22.53%
Expected future EPS growth rate is -25.22% lower than the Software�Infrastructure industry
Free cash flow (FCF) per share:
$8.40
Balance sheet equity growth per share: 32.73%
Equity growth rate per share is -1362.38% lower than the industry
Debt per share
$8.06
EBITDA per share
$13.22
Valuation Analysis Today of
MSFT
P/E Ratio:
26.55
P/E Ratio of Competitors/Peers:
28.26
P/E ratio is -6.05% lower than main peers & is -59.30% lower than the industry
Stock price/value with industry average P/E ratio: $624.96
MSFT is -59.03% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $48.88
Present value of the expected future dividends only: $32.51
P/S (Price to Sales ratio):
9.92
Price to sales ratio is -9.70% below the industry mean
P/B (Price to book value ratio):
12.57
Price to free cash flow: 30.47
Price to free cash flow ratio is -26.49% lower than the industry
Net income growth rate (3Y):
277.24%
Net income growth rate is -96.73% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 5.80%
Dividend yeild: 0.95%
Previous Dividend: $0.62
Previous adjusted dividend: $0.62
Previous Dividend: $2.42
Expected next dividend best case: $0.66
Expected next dividend worst case: $0.58
Average dividend payment (long-term): $0.56
Average dividend increase/decrease (growth rate) % per period: 2.05%
Expected next dividend payment date: 09/07/2022
Expected next dividend record date: 17/08/2022
Expected next dividend declaration date: 13/06/2022
Previous dividend payment date: 06/09/2022
Previous dividend record date: 19/05/2022
Previous dividend declaration date: 14/03/2022
Dividend History:
2022-05-18--$0.62
2021-11-17--$0.62
2021-05-19--$0.56
2022-02-16--$0.62
2021-08-18--$0.56
2021-02-17--$0.56
Dividend growth rate is -68.56% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
39.54%
Net debt to equity ratio:
30.59%
Debt to assets ratio:
17.91%
Net debt to assets ratio:
13.86%
Debt-to-asset ratio is -74.31% below industry average
Ability to repay debt:
Interest coverage ratio:
46.5
Interest coverage ratio is -122.04% less than industry average
Looking forward:
Debt growth rate:
-4.54%
Annual debt growth is -104% lower than industry average debt growth rate
Debt repayment rate in last quarter: 7.43%
Analysis of Key Statistics
Correlation of price movement with the market:
0.852
Statistical significance of correlation:
MSFT has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.48
Stock price is 77.53% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.48
Correlation of price movement with Nasdaq (^IXIC):
-0.009
Covariance of price movement with the market:
-0.011
Kurtosis
7.39
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.044
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MSFT
Gross Profit Margin Ratio:
275%
Operating Profit Margin Ratio:
42.56%
Operating profit margin is -458.55% lower than the industry
Net Profit Margin Ratio:
275%
Effective Tax Rate:
12.32%
Effective tax rate is -60.68% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
47.68%
Return on equity (ROE) is -55.34% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
21.60%
Return on assets (ROA) is -670.43% lower than the industry
Financial Leverage:
1.2x
Current Ratio:
2.16
Current ratio is -7.01% below industry average
Cash Conversion Cycle (days):
-26.1
Cash conversion cycle is -123.17% below industry average
The remaining useful life of property plant & equipment is: 3.0 years
Stock based compensation to net income ratio:
2.35%
In-depth Efficiency Analysis
Revenue generated per employee:
871.3K
Each employee generates 121% more revenue than industry average revenue per employee
EBITDA generated per employee:
446.1K
Each employee generates 582% more EBITDA than industry average revenue per employee
Profit generated per employee:
327.9K
Each employee generates 1465% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
84.8K
Each employee generates 328% more free cash flow than industry average revenue per employee
Assets/Capital per employee
728.9K
Each employee generates 328% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 7.51%
Growth rate in R&D investment/expenditure is -389.60% lower than the industry
Competitors/Peer firms of
MSFT
APPLE INC. (XNAS:AAPL)
NVIDIA CORPORATION (XNAS:NVDA)
ASML Holding NV (XNAS:ASML)
Broadcom Inc. (XNAS:AVGO)
ADOBE INC. (XNAS:ADBE)
INTEL CORPORATION (XNAS:INTC)
QUALCOMM INCORPORATED (XNAS:QCOM)
TEXAS INSTRUMENTS INCORPORATED (XNAS:TXN)
INTUIT INC. (XNAS:INTU)
Current Analyst Ratings
Strong buy�58%
Buy�54%
Hold�25%
Sell�0%
Strong sell�4%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
192.56B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
60.21B
132.35B
23.35B
5.67B
27.05B
21.38B
-
50.40B
2.04B
2.12B
13.83B
98.58B
81.94B
72.46B
82.63B
10.18B
72.46B
Statement of Cash Flow
Date:
Period:
3.21B
Differed Income Tax :
- 5970000.00K
Stock Based Compensation :
1.70B
Change in Working Capital :
5.46B
Accounts Receivables:
10.49B
Other Working Capital:
- 232000.00K
Other Non-Cash Items:
- 364000.00K
Net Cash Provided by Operating Activities:
24.54B
Investments in PP&E:
- 5810000.00K
Net Acquisitions:
- 1206000.00K
Purchases of Investments:
- 10309000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
9/30/21
2022
Q1
16.85B
113.74B
130.58B
27.35B
3.41B
12.98B
174.33B
75.35B
50.46B
7.79B
6.39B
-
21.10B
161.09B
-
335.42B
14.83B
3.25B
6.27B
38.47B
23.98B
80.53B
60.09B
40.06B
102.91B
-
183.44B
83.75B
66.94B
1.3B
-
September 30, 2021 at 6:00:00 AM
110.61B
151.98B
335.42B
120.13B
63.34B
46.5B
14.49B
- 417000.00K
- 3250000.00K
- 4826000.00K
612.00M
- 7684000.00K
- 4206000.00K
- 172000.00K
- 16276000.00K
- 73000.00K
4.94B
19.17B
14.22B
24.54B
- 5810000.00K
18.73B
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
MSFT
2023
2024
2025
2026
2027
$331.07
$352.17
$374.62
$398.49
$423.89