Microsoft Stock Analysis – Should You Buy Microsoft Stock?

In this Microsoft Stock Analysis, we will cover this IT giant that was once the most influential IT company around. Seems like a long time ago but in the 1990s, Microsoft (MSFT) was the King of IT. Even till today, they are still a big player but on the desktop and enterprise level…not so much on the internet level though. Microsoft really missed the boat on the internet boom. Not quite sure how Bill Gates did not see this one….

As always, my goals with this Microsoft Stock Analysis is to keep things simple and straightforward with no bias. Remember to leave a comment at the end of this analysis if you find it helpful…

Microsoft Stock Analysis – Business Snapshot

Microsoft Stock Analysis -Business Snapshot

Microsoft Stock Analysis -Business Snapshot

Personally, I feel Microsoft is a cash printing machine. With every new desktop, notebook, and server that rolls out from large OEM partners like HP, Dell, and Lenovo, Microsoft makes money from their operating system. They also generate plenty with their Office suites. The Microsoft business model is stable and I have every confident that they will continue to do well. But it’s all my gut feel at the moment. To know for sure, let’s dive deeper into MSFT financials…

Microsoft Stock Analysis – Earnings Per Share

Microsoft Stock Analysis - 10 year Earnings Per Share HistoryFrom 2006 to 2014, EPS growth has been stable and consistent. Then there was a dip in 2015. If we take a look at the past 10 years, MSFT is a stable company…definitely cannot be classified as a growth stock. But the stability of MSFT is something we can live with.

Microsoft Stock Analysis – Debt Equity Ratio

Microsoft Stock Analysis - Debt Equity Ratio

Microsoft Stock Analysis – Debt Equity Ratio

Microsoft D/E ratio is quite ok although we prefer it to be 0.5 or below. For the past 10 years, it was very low. Only in the last quarter, the D/E ratio is at 0.55. It’s acceptable though…

Microsoft Stock Analysis – Return on Equity

Microsoft Stock Analysis - Return on Equity

Microsoft Stock Analysis – Return on Equity

Good company with good business model and strong brandname. Management has done well for the past 10 years with a slight dip in 2015 which is not a big concern as I am confident it’s just an isolated bad year.

Microsoft Stock Analysis – Operating Cash Flow

Microsoft Stock Analysis - Operating Cash Flow

Microsoft Stock Analysis – Operating Cash Flow

Consistent growth in operating cash flow is a good sign. Microsoft is stable and strong. I would not have any trouble sleeping at night if I park my money in MSFT for the next 10 years. They will probably still be around. 🙂

Microsoft Stock Analysis – Should You Buy Microsoft Stocks?

For sure, there is no concern with Microsoft. It’s a safe bet and really suitable if you want a stable portfolio. Microsoft should be included into any portfolio as a defensive stock. But only do it at the right price. We are going to evaluate Microsoft as a dividend stock instead…

Microsoft Stock Analysis - Should You Buy Microsoft Stocks?

Should You Buy Microsoft Stocks?

At the point of this writing, Microsoft is trading at $52 and it’s about 15% higher than our valuation. No doubt Microsoft is a fundamentally strong and stable stock, however, it’s good to practice some patience here. We want to buy great companies at great prices… fire sale prices in fact! And now, it’s just not the right time. We are going to wait for $44.60.

Decide well and Good luck! Also, please leave a comment below as I love to hear from you.

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