Valuation Overview

Growth Story

Over the next few years, revenue is expected to grow by 14.48%, higher than industry average of 12.66%.

Growth Trajectory

Profitability

In the growth phase company makes 45.03% profit on every dollar of sales, higher than industry average of 23.53%.

Profitability Trajectory

Risk Profile

Investors expect at least 10.07% return to justify the risk of holding stock.

Risk vs Return

Required Return (Cost of Capital) (%)
Return on Invested Capital (%)

Financial Health Overview

Enterprise Value
3.12T USD
Equity Value
3.15T USD
FCF Yield
56.82%
Average ROIC
48.20%
Cost of Capital
9.61%
P/E Ratio
35.59x
Financial MetricMost Recent 12 months (USD)Previous Year (USD)
Revenues281.72B USD245.12B USD
Operating Income or EBIT126.95B USD110.93B USD
Interest Expense2.38B USD2.94B USD
Book Value Of Equity343.48B USD268.48B USD
Book Value Of Debt60.59B USD67.13B USD
Cash and Marketable Securities94.56B USD75.53B USD
Number of Shares Outstanding7.43B--
Minority interests0 USD0 USD
Current Stock Price498.46 USD--
Effective Tax Rate18.00%--
Marginal Tax Rate25.00%--

Performance vs Industry

Revenue Growth
+2.27%
14.93%Company
vs
12.66%Industry
Above Industry
Operating Margin
+21.53%
45.06%Company
vs
23.52%Industry
Above Industry
Microsoft Corporation demonstrates superior performance in both growth and profitability compared to industry peers, indicating strong competitive advantages and operational excellence.

Terminal Value Analysis

Growth Rate
4.59%
Cost of Capital
8.83%
Return on Capital
17.66%
Reinvestment Rate
26.04%
Terminal value represents 65% of total enterprise value, based on 4.59% perpetual growth and 8.83% discount rate.

Equity Value Breakdown

ComponentValueType
Present Value (Terminal Value) 2.04T USD Add
Present Value (Cash Flow Over Next 10 Years) 1.07T USD Add
Value of Operating Assets 3.12T USD Sub-total
Debt 60.58B USD Subtract
Minority Interests — Subtract
Cash 94.55B USD Add
Value of Equity 3.15T USD Sub-total
Number of Shares 7.43B shares Divisor
Estimated Value per Share (Fair Value) 424.37 USD Total
Current Market Price 498.46 USD Reference

Financial Projections

Total FCF Present Value
1.07T USD
Avg Revenue Growth
9.99%
Avg Operating Margin
45.01%
Avg ROIC
48.20%
Year 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Terminal Year
REVENUE
Revenue323.13B USD369.91B USD423.46B USD484.76B USD554.93B USD624.30B USD690.02B USD749.02B USD798.27B USD834.99B USD873.40B USD
Growth Rate 14.70% 14.47% 14.47% 14.47% 14.47% 12.50% 10.52% 8.55% 6.57% 4.59% 4.59%
PROFITABILITY
Operating Income145.61B USD166.60B USD190.66B USD218.20B USD249.72B USD280.93B USD310.50B USD337.05B USD359.22B USD375.74B USD393.03B USD
Operating Margin 45.06% 45.03% 45.02% 45.01% 45.00% 45.00% 45.00% 45.00% 45.00% 45.00% 45.00%
EBIT (1-tax)119.40B USD136.61B USD156.34B USD178.92B USD204.77B USD226.43B USD245.92B USD262.23B USD274.44B USD281.80B USD294.77B USD
CASH FLOW
Reinvestment11.65B USD13.33B USD15.26B USD17.48B USD17.28B USD32.73B USD29.39B USD24.53B USD18.29B USD19.13B USD76.78B USD
Free Cash Flow107.75B USD123.27B USD141.07B USD161.44B USD187.49B USD193.69B USD216.53B USD237.69B USD256.15B USD262.67B USD217.99B USD
Terminal Value--------------------5.15T USD
Present Value97.89B USD101.75B USD105.79B USD109.99B USD116.04B USD109.16B USD111.37B USD111.82B USD110.48B USD104.10B USD—
EFFICIENCY
ROIC 38.57% 42.53% 46.73% 51.15% 55.75% 58.88% 58.93% 58.70% 58.24% 57.57% 17.66%
Cost of Capital 10.07% 10.07% 10.07% 10.07% 10.07% 9.82% 9.57% 9.32% 9.07% 8.83% 8.83%
Sales/Capital 4.01x 4.01x 4.01x 4.01x 4.01x 2.00x 2.00x 2.00x 2.00x 2.00x —

Profitability & Efficiency

Operating Margin (%)
ROIC (%)

Value Creation Analysis

ROIC (%)
Cost of Capital (%)

Operational Cash Flow Analysis

Free Cash Flow ($B)
Reinvestment ($B)