MSFT Investment Analysis Report & Stock Research, Microsoft Corp.

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MSFT Stock Report

2-Year Price History

Recent Price
(7/2 4:00PM)
$23.37
52-Week Price
$14.87 - $28.50
Market Capitalization
$208.0 Billion
Dividend Yield
2.20%
Most Recent Dividend
$0.43

Ockham's Rating

We are reaffirming our rating on MSFT as of this week’s report. While we firmly believe that valuing companies based on fundamentals is very useful, we are careful not to view historical valuations in a vacuum. It is foolish to believe that a stock will always revert to historical norms. So, although there is value in historical norms, they only tell part of the story. When the market or a sector breaks through strategic thresholds such as standard deviations of historical pricing multiples, we find it necessary to view history with a grain of salt as a new reality may be dawning.

This week's rating remains unchanged from a week ago, as MSFT's fundamentals have remained intact or even in some cases have improved. The market has not triggered any significant volatility alerts for the last half year's returns, so we feel confident in comparing this stock to where it has stood historically. Please continue reading for a more thorough analysis of the company's fundamentals and other key data.

Although the price of MSFT went up by 0.09% since 06/27/2009, this has little affect on our final analysis.

As of this report, there have been no meaningful adjustments in cash earnings expectations or guidance in the last week.

MSFT Stock Evaluation

Looking at MSFT since last week, there has been little movement in price on a percentage basis. Additionally, there haven't been significant revisions to earnings estimates for MSFT. Given this, we are maintaining our Undervalued rating. While there may not have been any meaningful changes in either price or earnings outlook, we still want to analyze where MSFT is in relationship to its historical fundamentals. Looking at the ratios and multiples described below and throughout this report is the best way to evaluate the strength of MSFT's current Undervalued rating.

MSFT Revenue

As a value investing shop, we are interested in seeing how MSFT's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 6.95x and the low end of the range at 4.82x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for MSFT of 2.93x is well below its normal historic Price to Sales levels. At a price of $23.37, MSFT is 51% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

MSFT Cash Earnings

As the old saying goes, "Cash is King!" However, we prefer to capture a few other items within our analysis to identify "cash earnings". Nevertheless, an analysis of Cash Earnings is absolutely pivotal to assessing a company's value, and currently MSFT is significantly below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from MSFT. For example, MSFT's Cash Earnings ratio per share has fluctuated between 15.63 and 22.45 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where MSFT is with respect to prior business periods.

So with MSFT's current price (latest close of $23.37) and most recent level of Cash Earnings reported, we see significant opportunity from a value perspective. At its current price level, MSFT is 41% below its average level of Price to Cash Earnings on a historical basis. This means that investors were willing to pay for a much higher stock price than currently for the same level of Cash in the past, on a relative basis. There are a couple of important things to remember, however. First, value doesn't exist in a vacuum. So if the market doesn't recognize this value, even a great disparity in Price to Cash Earnings cannot force an immediate stock price reaction. Second, patience is key when looking at securities that have reached these levels of Price to Cash Earnings versus their historical norms. So be patient with MSFT.

MSFT Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In MSFT’s case, the estimated annual dividend is $0.52 resulting in a current dividend yield of 2.23%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from MSFT against the historic high and low levels over the past 10 years. The highest dividend yield from MSFT over this period was 3.50% while the lowest dividend yield was 0.00% MSFT’s current dividend yield is therefore significantly higher than its median dividend yield historically. In fact, the current yield is 27.43% above the median which weighs very positively on our analysis of MSFT.

Peer Comparison

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Microsoft Corp. Industry Grouping

(7/2/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding MSFT) 14.68 9.28 » 115.15 2.70 2.08 » 32.77 20.11% 26.28%
*10 year range does not include current year values
Microsoft Corp. MSFT $208.0 Billion $23.37 11.34 7.22 » 46.34 2.93 2.07 » 17.65 13.42% 32.34%
Oracle Corp. ORCL $105.4 Billion $21.04 13.93 9.17 » 89.35 3.77 2.98 » 23.95 18.02% 24.14%
SAP AG Shs Sponsored American Deposit Receipt Repr 1 Sh SAP $46.8 Billion $39.40 13.92 10.32 » 130.27 2.28 1.59 » 18.41 12.76% 28.04%
Infosys Technologies Limited- Shs Sponsored American Deposit Receipt Repr 1 Sh INFY $20.7 Billion $36.21 14.37 8.39 » 229.52 3.41 2.60 » 91.22 34.42% 31.66%
Wipro Ltd ADS WIT $17.2 Billion $11.75 20.26 8.67 » 95.24 2.26 1.47 » 24.26 30.03% 26.02%
Automatic Data Processing, Inc. ADP $17.1 Billion $34.18 10.92 9.85 » 31.39 1.76 1.75 » 6.03 5.30% 21.56%
Current
Rating on:
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The latest TV Media Discussion

5:05:47 PM MSFT $23.38 Microsoft Corp.
Happy Hour
2 days ago (07/03)
“…Tracy: maybe because of cody: how did they mess it how could they mess up the system when it was only four people? Can the system handle four people trading ge and MICROSOFT? Let's talk quickly about the it was ugly day. >> horrible job numbers. Oil came down, energy, tech, you name it, everything came down. It appears it is still doom …” …more details…
5:15:16 PM MSFT $23.37 Microsoft Corp.
Fast Money
3 days ago (07/02)
“…They prepared their inventories I think tech at the end of the day is still the place that you want to be in playing it. But today's tape, you had to cut >> who has the best balance you look at MICROSOFT, apple. The cash these firms have on the sheets, cisco, oracle, across the board you've got to like what you're seeing. MICROSOFT up 12% for the month. This is just a slight pull-back. It shouldn't shake you out just you may use this opportunity now to maybe reevaluate and decide do I want more? Should I add some put protection along the way? Something because I love all the -- the street right now, they love MICROSOFT, the direction. Not just being the windows seven. >> they are in a position to buy smaller companies out there. Pete, you were actually talking about options activities outside of technology. …” …more details…
5:14:25 PM MSFT $23.37 Microsoft Corp.
Fast Money
3 days ago (07/02)
“…Sector of the year, not immune >> well, I mean, i've been playing tech from the long side. Unfortunately today, the tape forced me out. MICROSOFT, i've been chattering about that. I had to cut that. Had to. I don't think the technology sector is a sector where you reverse a play from the long side. I think the technology sector is …” …more details…
5:05:45 PM MSFT $23.38 Microsoft Corp.
Happy Hour
3 days ago (07/02)
“…Tracy: because of volume. Four people trading. Cody: how did they mess it how could they mess up the systems when only four people? Can't the systems handle four people trading ge and MICROSOFT? Speaking of which, talk quickly about the markets t was ugly day. Tracy: bulk of the was job numbers. Oil, energy, tech, everything was down because …” …more details…
4:27:39 PM MSFT $23.38 Microsoft Corp.
3 days ago (07/02)
“…They're going to grab the four o'clock close on nasdaq. Nasdaq spokes people confirmed to me it did not affect their close whatever. They have the official four o'clock closing price, MICROSOFT, intel and cisco, those grabbed from nasdaq's last closing price at four o'clock. The 27 and trade on the nyse as the primely exchange, that's going to continue until they say …” …more details…
12:03:12 PM MSFT $23.29 Microsoft Corp.
3 days ago (07/02)
“…Weakest days we have had. The internal is improved from this morning. Went from 7 to 1 to 5 to 1. Oracle, MICROSOFT, all week. Oracle, 3.5%, it is a broad based decline and we have weakness in retail well beyond 6.6%, and chips are …” …more details…
12:00:28 PM MSFT $23.29 Microsoft Corp.
3 days ago (07/02)
“…>> dagen: thank you again. Now on to tom and liz macdonald! Take it away. >> tom: cheryl's got the day off. Does MICROSOFT calendar go out that far? I'm sure it does. We thank you very much. Have a wonderful day. Breaking news. The dow with the june unemployment rate climbing to …” …more details…
11:34:28 AM MSFT $23.36 Microsoft Corp.
3 days ago (07/02)
“…Company has posted a slight decline in june and for the last three months. So apparently google's taking a little bit of a step back in terms of market share while MICROSOFT and yahoo! And others are making small strides. But not everybody, including google's ceo eric schmidt is getting to worked up about any of this. He is saying that all of this hoopla and all of these strides is largely due to the big budgets that MICROSOFT is attributing to this project. Take a listen to what he had to say to liz claman recently. But you earn that, you just don't buy it with ads, you earn it and you earn it customers by customer, search by search, answer by answer. >> so he's down playing MICROSOFT's market share gains. Right now, bing has an estimated budget of 80 to 100 million dollars behind it, dagen, and so, to eric schmidt's point he's saying the real test is when you …” …more details…
11:33:15 AM MSFT $23.37 Microsoft Corp.
3 days ago (07/02)
“…Be bombarded with tweet, but the company clearly trying to take some sort of differentiated strategy and according to stat counter, it appears to be working. Here is what stat counter had to saying that MICROSOFT share of the search market in the month of june actually increased to 8.2%, that's about a percentage jump from the month prior before the bing platform was launched. …” …more details…
11:32:33 AM MSFT $23.37 Microsoft Corp.
3 days ago (07/02)
“…Argument there's a hidden tax already will, you're insuring people who are uninsured. Anyway, dan thank you for being >> thank you for having me. >> dagen: dan clifton. Moving on to MICROSOFT, bing the first search engine to include how is bing? How is it holding up? Grabbing market share? Shibani joshi has more on the story, good to see you, shibani. >> as I promised I got some details and data on how the bing platform is doing. First let's talk about how MICROSOFT is trying to get a leg up on the competition. The first of the major internet search providers to include tweets or twitter posting in the bing search results. A huge stride in the realm of …” …more details…
10:40:42 AM MSFT $23.41 Microsoft Corp.
3 days ago (07/02)
“…>> dagen: what about followers? Will others follow suit? Will google, yahoo! Follow suit? >> they're all working on real time search updates to their platforms, this is not having that's going to be isolate today MICROSOFT. Everyone is going to do it soon. You so much. See you next hour. Your bags are packed and I don't know where i'm looking. I'm sorry. …” …more details…
10:40:17 AM MSFT $23.41 Microsoft Corp.
3 days ago (07/02)
“…And says whenever aol decided it was going to get spun off from time warner, great insights. There's great information to be had from the social networking platforms and MICROSOFT in a way to my great from google and yahoo! Is doing this to differentiate itself. We'll see if it pays off. When i'm out here in the next hour and kind of talk to you about the performance of bing and whether it's taking a bite …” …more details…
10:39:37 AM MSFT $23.43 Microsoft Corp.
3 days ago (07/02)
“…>> dagen: will it have more >> garbage is a good way to put MICROSOFT is trying to filter prominent tweeters on there, whose list when you search al gore, ryan seacrest, you can categorize him in a couple of …” …more details…
10:04:46 AM MSFT $23.36 Microsoft Corp.
3 days ago (07/02)
“…Declines to give people perspective of how broad based 7-1 right now. Obviously light volume but overwhelmingly negative. Heavy hitters underperforming. Yahoo! MICROSOFT, oracle, ebay, struggling. The search for green arrows, what few green arrows he had over there at the nyse. Research in motion is the only major big cap I can find. Up 1%. …” …more details…
5:58:57 PM MSFT $24.03 Microsoft Corp.
Happy Hour
4 days ago (07/01)
“…Per it is making grounds. >> google? >> no but yahoo! Is crying in their boots because they did not make a deal with MICROSOFT. >> he promise to buy a vehicle from ford but I have not yet. Why am waiting for them to say this is how we're doing a I am looking to pay retail price. >> I am looking for an american car. …” …more details…
3:05:31 PM MSFT $24.12 Microsoft Corp.
4 days ago (07/01)
“…Bank of america, merrill lynch raised estimates and the price target. I would define that as room to take a look at some of the big cap names that are strong today. MICROSOFT, cisco, oracle up better than 1.4% all the way to oracle up 1.9%. On the down side I want to say dell, rim, and ebay all struggling today. …” …more details…
12:03:55 PM MSFT $24.10 Microsoft Corp.
4 days ago (07/01)
“…Intel up 4 plus percent, and even amag up 2.5%. I want to touch on the search business for a second. Another report today said that MICROSOFT, through binge, getting more market share, less than gaining. And if you look at both of the other stocks, obviously more of a net negative for yahoo than for google, so an interesting …” …more details…
12:02:07 PM MSFT $24.10 Microsoft Corp.
4 days ago (07/01)
“…Year to date. Here are the winners for the dow jones industrial average. American express up 26%, MICROSOFT, intel and cisco. You can see ibm up 26% year to about 13 of these components are in the green and the biggest …” …more details…
9:32:48 AM MSFT $24.15 Microsoft Corp.
4 days ago (07/01)
“…Good start to the month of july. Let's talk again. I got request about the numbers from stat counter in terms of search. MICROSOFT, 8.23%. Bing definitely having an yahoo! Over 11%. Compare it to google which went down slightly at 78.48%. So still a huge share for …” …more details…
9:03:31 AM MSFT $23.94 Microsoft Corp.
4 days ago (07/01)
“…Point there. >> thank you very much, bertha. Like the dress, by the way. It is green, right? We're starting off in the green here to start off the month of july. Let's talk about them saying that MICROSOFT and bing gaining market share in search. Let's have perspective. If you combine yahoo! And MICROSOFT, wink, wink, you're still about a quarter of the reach of google. Got an ipo. Log me in. Backed by software company, backed by intel. Prices high end of the range at $16 a share. …” …more details…
7:28:33 AM MSFT $23.85 Microsoft Corp.
Squawk Box
4 days ago (07/01)
“…A balanced budget. Until the budget is agreed upon state spenders and local agencies will get i.O.U. Notes rather than actual money. >>> google dominates the search market but MICROSOFT's new service is helping it move up the chart. Bing helps push market share to …” …more details…
6:48:55 PM MSFT $23.81 Microsoft Corp.
Mad Money
5 days ago (06/30)
“…Not make money, we're interested in that. Speaking of gross margins, look at how expensive the company's product is to make. Look at the cost of doing business in general. MICROSOFT has incredibly hoo I margins on its windows operating system because it's virtual monopoly and not much competition. Supermarkets have bad margins. They face cuts and competition …” …more details…
5:48:55 PM MSFT $23.84 Microsoft Corp.
Fast Money
5 days ago (06/30)
“…We talked about it the day it best search out there. It's much more in-depth. >> oh! >> you can bing it and find the look at the performance of MICROSOFT. It's the second or third biggest performer in the dow industrials and window seven lines up perfectly that the entire world is anticipating and I think MICROSOFT, you have to own it. >> careen in wisconsin writes, what do you think of nokia now that it has been downgraded to an underperform and are you still bullish on your name? Answer, karen. …” …more details…
5:48:13 PM MSFT $23.84 Microsoft Corp.
Fast Money
5 days ago (06/30)
“…Let's get fast messages in here since we have a little bit of time to answer a tweet. Steve in beverly hills, california, says we have owned MICROSOFT in the past and lived through the horrible vista and the new 7. Is it time to get back into this name? >> absolutely it is. I don't think people have correctly priced in the value of they are stealing market share …” …more details…
2:41:58 PM MSFT $23.74 Microsoft Corp.
5 days ago (06/30)
“…There was pent up demand of users who are using productions, looking for new platforms. People could shift off of windows xp and go to windows 7. MICROSOFT could be the beneficiary. MICROSOFT seems to be getting more competitive with the search engine and think the stock has room to run. >> speaking of refer terms, it was stunning to anybody over the …” …more details…
2:41:31 PM MSFT $23.74 Microsoft Corp.
5 days ago (06/30)
“…Here to download how to thrive in the tech space from gda us. Jim mentioned this window seven happening for MICROSOFT. Is it tradeable? >> certainly. If you look at product upgrades in the past, when MICROSOFT came with a new generation of software, it benefits the technology food chain. You see people buy new pcs. It can go through the hard drive companies which is western digital and not only MICROSOFT itself. >> what are the derivatives you would do? >> not only is windows a major …” …more details…
2:40:12 PM MSFT $23.75 Microsoft Corp.
5 days ago (06/30)
“…Jobs is back to work. The makings of an economic apple might be a good bet. MICROSOFT sees increase that will spur a broader uptake. The new search energy with xbox and enterprise spending that …” …more details…
12:13:19 PM MSFT $23.79 Microsoft Corp.
5 days ago (06/30)
“…Cause security issues. Heat pact and dell remained silent on the issue. This could have affected a wide swath of tech, including sony, MICROSOFT and intel. China said this was all about trying to protect web surfers complaining about increased pornography and other illegal >> got it. …” …more details…
11:26:33 AM MSFT $23.85 Microsoft Corp.
5 days ago (06/30)
“…Of last year and we also have a bit of gold obviously to protect against inflation. We do find the opportunities in high quality u.S. Names. MICROSOFT, ebay, dell, which are for a number of reasons shall the economy, but also, I think misstep by management in a number of cases and where the balance sheets are very strong, and you don't need to reinvest …” …more details…
11:13:57 AM MSFT $23.86 Microsoft Corp.
5 days ago (06/30)
“…Over the stocks he made. >> I think we'll see disappointments here coming at the end of this quarter. But I like walmart in here. I've started to buy that. The price hasn't gone up all that much. MICROSOFT MICROSOFT, I think, i'm still being defensive, I think as the consumer is continuing to >> do we have -- hang on, mike. We have a chart of the -- a big …” …more details…
11:05:06 AM MSFT $23.86 Microsoft Corp.
5 days ago (06/30)
“…Head off to, I don't know the hamptons, the jersey shore, wherever they're going to go. What's hot, what's not. The dow jones industrial average down 95 points right now and we have some winners, general electric, intel, MICROSOFT, a handful of names and bank of new york melon a short time ago the putting a buy rating and rising the price target to $42 a share …” …more details…
5:57:29 PM MSFT $23.89 Microsoft Corp.
Fast Money
6 days ago (06/29)
“…Prices is missing the mark, decent company. >> nike, we talked about that >> good numbers from them. >> heading into the final day of the first half of the year, american express, ibm, MICROSOFT top three performers. >>> i'm melissa lee, thanks for watching, see you back here 5:00 p.M. Tomorrow for more "fast money." …” …more details…
5:36:23 PM MSFT $23.88 Microsoft Corp.
Fast Money
6 days ago (06/29)
“…On this. I think they've got something here, it doesn't have to be a huge home run for it to be anything they can do right on this is going to be huge for the >> absolutely, amen, that's why I bought more MICROSOFT today. But the question I have, brendan, going forward when you look at the economic recovery that everybody's forecasting in the third quarter. Does it line up perfectly with windows 7 and the ability for …” …more details…
5:35:45 PM MSFT $23.88 Microsoft Corp.
Fast Money
6 days ago (06/29)
“…Brendan, 14% for the month of >> i'm still amazed how much people don't know about window even and what that might mean to the country. We had an encouraging sign when MICROSOFT took down numbers because of this tech guarantee where they're allowing people to because of that they've got to defer half on this early windows 7 on upgrades they do now and yet the stock traded right through that and didn't cause any hesitation at all when they took $200 million to $300 million on the top line. I think that shows people are looking through the MICROSOFT numbers and looking to the longer term products, that's very encouraging. >> brendan, this is karen, talk to us about bing. How meaningful will it be for …” …more details…
5:34:59 PM MSFT $23.93 Microsoft Corp.
Fast Money
6 days ago (06/29)
“…For storm in the third quarter. The charts will hold the answer. And who made the most money today? We've got the answer at the end of the show. So stay tuned for that. Time now for the stock of the day. MICROSOFT continuing to outperform, closing the day 2% higher, bringing the gain to 14% in the month of june alone. Will this run continue? Brennan barnacle joins us with a …” …more details…
4:26:18 PM MSFT $23.85 Microsoft Corp.
6 days ago (06/29)
“…The panels are expected to vote, melissa, sometime tomorrow >> wow, those are some good mike huckman, thanks so much. Here are some of the other stories we're following on the "closing bell" ticker right now. MICROSOFT one of the biggest deutsche bank raising its price target on the stock to $30 from $22 on expectations the company's upcoming windows 7 operating system will be rapidly adopted by pc users once it's take a look at MICROSOFT shares and how they are trading on the up 51 cents. Better than 2%. Credit suisse upgrading home builder kb homes to neutral from …” …more details…
3:08:41 PM MSFT $23.79 Microsoft Corp.
6 days ago (06/29)
“…A lot of green on the screen for today. The only dow component in the red is alcoa. Certainly, look at the tech names doing so well. Certainly hewlett-packard, it's been holding on. And MICROSOFT and intel and you can see some of the other names doing very well here we heard john corpina saying the glass is half full, saying we're now at levels we started the month. Guess it's all right. …” …more details…
3:04:26 PM MSFT $23.74 Microsoft Corp.
6 days ago (06/29)
“…I saw it when I drove into new york city at 6:00 a.M. Everybody already knew it was the case. Now, of course we wish steve jobs the best and that he lives along and fruitful life, but you're wasting some paper and everybody already knew it. MICROSOFT, talk about some bandwidth here. Up 1.6%. Deutsche bank upping the price target here to $30. Now, the interesting part of that is you take a look at a five-year chart of MICROSOFT, it's only touched it a brief time. $30 mark. They came out and said their new notebook that's catered through …” …more details…
1:58:40 PM MSFT $23.76 Microsoft Corp.
6 days ago (06/29)
“…Leading the pack up by 113. Merck is up about three quarters of a cent. Du pont is traded up about 58 cents on the trading session. MICROSOFT on the list as well and exxon-mobil with a decent gain of $1.33. Metals are selling different …” …more details…
10:08:38 AM MSFT $23.77 Microsoft Corp.
6 days ago (06/29)
“…Intel having its gains. Still positive by .7. Dell, according to bernstein, looking at a small to medium size acquisition. Could be another computer that's positive by 1%. MICROSOFT strong still. Up 2%. 1.8% in this market. Very good. Some of the other widely helds to point out, apple is positive to negative. Research in motion down almost …” …more details…
View All Microsoft Corp. News

Key Fundamentals

MSFT - Microsoft Corporation Fundamentals
Price (7/2 4:00PM) $23.37
Volume (7/2 4:00PM) 0
Last Close Price $23.37
10 Day Average Volume 64.1 Million
13 Week Price Range $18.27 - $24.34
52 Week Price Range $14.87 - $28.50
LTM Revenue $61.2 Billion
 
Shares Outstanding (06/2008) 8.9 Billion
Market Capitalization $208.0 Billion
Shares Held By Institutions 5.5 Billion
Institutional Holders 2,295
% Shares Held By Institutions 62.20%
Earnings Per Share (EPS) $1.87
P/E Ratio 13.40
Book Value Per Share $4.15
 
Gross Margin 83.70%
Annual Dividend 0.52
Dividend Yield 2.20%
Beta 1.01
Fiscal Year Ends June

About Microsoft Corp.

Microsoft Corporation is considered to operate in the Technology sector. They specifically operate in the Application Software business segment contained within the Computer Software & Services industry.

The Company develops, manufactures, licenses, and supports a range of software products for many different types of computing devices.

NASDAQ 1796.52

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