Microsoft Corp (MSFT, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $366.82, Microsoft Corp has witnessed a daily loss of 0.77%, marked against a three-month change of 14.72%. A thorough analysis, underlined by the GF Score, suggests that Microsoft Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 6/10
Considering the high ranks in financial strength, profitability, and growth, and a moderate momentum rank, GuruFocus assigned Microsoft Corp the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Microsoft Corp Business
Microsoft Corp, with a market cap of $2.73 trillion and sales of $218.31 billion, is a titan in the technology sector. The company boasts an operating margin of 43.01%, reflecting its efficiency and profitability. Microsoft develops and licenses consumer and enterprise software, known for its Windows operating systems and Office productivity suite. The company is organized into three broad segments: productivity and business processes, intelligence cloud, and more personal computing. These segments encompass a range of products and services, including Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics, Azure, Windows Server OS, SQL Server, Windows Client, Xbox, Bing search, display advertising, and Surface devices.
Financial Strength Breakdown
Microsoft Corp's Financial Strength rating is a testament to its resilient balance sheet and prudent capital management. The company's Interest Coverage ratio of 47.11 far exceeds Benjamin Graham's recommended threshold, indicating a strong ability to meet interest obligations. An Altman Z-Score of 9.17 places Microsoft Corp well above the danger zone for financial distress, while a Debt-to-Revenue ratio of 0.39 shows a strategic approach to debt management.
Profitability Rank Breakdown
The Profitability Rank of Microsoft Corp is outstanding, with an Operating Margin that has consistently increased over the past five years. The company's Gross Margin also shows a steady upward trend, indicating an increasing ability to turn revenue into profit. Microsoft Corp's financial health is further confirmed by a strong Piotroski F-Score and a Predictability Rank of 4.0 stars, which speaks to the company's consistent operational performance.
Growth Rank Breakdown
Microsoft Corp's high Growth Rank reflects its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 15.1% outperforms the majority of its industry peers. Additionally, Microsoft Corp has experienced a significant increase in EBITDA over the past few years, with a three-year growth rate of 16.5 and a five-year rate of 18.5, highlighting its growth capabilities.
Conclusion: Microsoft Corp's Position for Outperformance
Considering Microsoft Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's solid financial foundation, impressive profit generation, and sustained growth trajectory make it a compelling choice for value investors. As Microsoft continues to innovate and expand its market presence, it remains a top contender in the technology sector, poised for future success.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
