MSFT Analysis — TradeApes

MICROSOFT CORP (MSFT)

Technology Software

$416.67 close · Jun 06, 2026

Above 50 SMA

52W -23.1% from High

Methodology Breakdown

Methods agree on direction (under/over-valued) but the magnitudes diverge widely. The zone is defensible; the specific dollar isn't.

Method	Value	Role
DCF (Base Case)	$180.92	REFERENCE
DCF (TTM-anchored)	$173.79	REFERENCE
Peer Multiples	$407.73	REFERENCE
Earnings Power Value	$75.18	REFERENCE
Book Value Anchor	$170.25	REFERENCE
Earnings Anchor	$281.20	REFERENCE
Cash Floor	$7.36	REFERENCE
NAV Anchor	$170.25	REFERENCE

Verdict basis:


              direction_agreement

Health Score

Out of 100

Healthy

Pillar Scores

Financial Strength 80

Operating Trend 60

Valuation 48

Capital Allocation 50

Risk Management 70

Positives

↑ Low leverage — net debt/EBITDA below 1× +2.5

↑ Strong interest coverage — EBIT covers interest 10×+ +2.5

↑ Free cash flow positive — business generates real spendable cash +2.5

Concerns

↓ High P/E — 25–45×, growth premium already priced in -2.5

↓ Altman Z-Score in grey zone — uncertain financial stability -1.0

Signal contribution: +12.0 from strengths -3.5 from concerns

Health Score Trend 7 snapshots

Cross-Check: Greenblatt Magic Formula

⚠ Divergent

Earnings Yield

5.2%

Rank 567 / 1256

Return on Capital

284.1%

Rank 106 / 1256

Combined Rank

83th pctl

1256 companies ranked

Magic Formula ranks this company higher than our composite. Our lower score is likely driven by factors the Magic Formula does not assess: cash flow quality, balance sheet risk, trend momentum, or sentiment signals.

Based on Joel Greenblatt's Magic Formula methodology. Not investment advice.

Financials

TTM Financials

Revenue ?Total sales generated from the company's primary business activities over the trailing twelve months.	318.27B
Gross Profit ?Revenue minus cost of goods sold. What remains before operating expenses — reflects pricing power and production efficiency.	217.41B
Operating Income ?Profit from core business operations after all operating expenses (EBIT). Excludes interest and taxes.	148.96B
Net Income ?Bottom-line profit after all expenses, interest, and taxes are deducted from revenue.	125.22B
Free Cash Flow ?Operating cash flow minus capital expenditures. The actual cash the business generates after maintaining its assets — the truest measure of profitability.	72.92B
EBITDA ?Earnings before interest, taxes, depreciation & amortization. A proxy for operating cash earnings that strips out accounting and financing differences.	179.26B
Total Debt ?Combined short-term and long-term interest-bearing debt obligations. Compare against cash and earnings to gauge leverage risk.	40.26B
Cash & Equivalents ?Highly liquid assets on hand — cash, money market funds, and short-term securities. The company's immediate financial cushion.	32.11B

Valuation

Market Cap	3102.11B
Enterprise Value	3132.50B
EV / Revenue	9.8x
EV / EBITDA	17.5x
P/E (TTM)	24.8x
Forward P/E	—
PEG	—
P/FCF	42.5x
FCF Yield	2.4%

EV/EBITDA vs history — 22% percentile (historically cheap)

CheapMidExpensive

EV/Sales vs history — 22% percentile (historically cheap)

CheapMidExpensive

P/Book vs history — 20% percentile (historically cheap)

CheapMidExpensive

Relative Valuation

Using relative multiples

EV / Revenue

9.8x

Book Value / Share

$55.66

Price / Book

7.5x

P/E (TTM)

24.8x

Price / Sales

9.7x

Key Metrics

Gross Margin ?Gross profit as a % of revenue. Measures how efficiently the company produces its goods or services — higher is better.	68.3%
EBITDA Margin ?EBITDA as a % of revenue. Shows core operating profitability before accounting adjustments — useful for comparing across industries.	56.3%
Net Margin ?Net income as a % of revenue. The ultimate measure of overall profitability after every expense, interest payment, and tax is accounted for.	39.3%
FCF Margin ?Free cash flow as a % of revenue. Shows how much of each dollar of revenue converts into real, spendable cash.	22.9%
Revenue Growth (YoY) ?Year-over-year change in total revenue. Measures business momentum — sustained growth above 15% is typically considered strong.	17.9%
Net Income Growth (YoY) ?Year-over-year change in net income. Shows whether profits are growing faster or slower than revenue — a key indicator of improving or deteriorating quality.	29.6%
Piotroski F-Score ?Score from 0–9 measuring financial strength across profitability, leverage, and efficiency signals. 8–9 = strong, 0–2 = distressed.	6 / 9
Altman Z-Score ?Bankruptcy risk model. Above 2.99 = safe zone, 1.81–2.99 = grey zone, below 1.81 = distress signal. Most useful for manufacturing companies.	2.96

Community Sentiment

Not enough ratings yet.
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Quarterly Financials

Metric	Q3 '26	Q2 '26	Q1 '26	Q4 '25	Q3 '25	Q2 '26	Q1 '26	Q4 '25	Q3 '24	Q2 '24	Q1 '24	Q4 '25
Revenue ?Total quarterly sales from primary business operations.	82.89B	81.27B	77.67B	76.44B	70.07B	69.63B	65.59B	64.73B	61.86B	62.02B	56.52B	56.19B
Gross Profit ?Quarterly revenue minus cost of goods sold.	56.06B	55.30B	53.63B	52.43B	48.15B	47.83B	45.49B	45.04B	43.35B	42.40B	40.22B	39.39B
Operating Income ?Quarterly profit from core operations before interest and taxes (EBIT).	38.40B	38.28B	37.96B	34.32B	32.00B	31.65B	30.55B	27.93B	27.58B	27.03B	26.90B	24.25B
Net Income ?Quarterly bottom-line profit after all expenses and taxes.	31.78B	38.46B	27.75B	27.23B	25.82B	24.11B	24.67B	22.04B	21.94B	21.87B	22.29B	20.08B
FCF ?Quarterly free cash flow: operating cash minus capital expenditures.	15.80B	5.88B	25.66B	25.57B	20.30B	6.49B	19.26B	23.32B	20.97B	9.12B	20.67B	19.83B

Revenue & Free Cash Flow

Market Cap vs. DCF Fair Value Band

Shaded region = bear-to-bull DCF range. Line = actual market cap.

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Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Scores and valuations are derived from SEC filings and publicly available data. Always do your own research before making investment decisions.