# Microsoft Corporation (MSFT) fundamentals

Data as of 2026-09-08. NASDAQ, United States. Sector: Technology / Software. Price $499.70, market value $3.71 trillion.

## Valuation
- **P/E (trailing): 27.9×** (5-yr avg 30.9×, 3-yr avg 31.4×). Microsoft Corporation trades at 27.9× trailing earnings, close to its own five-year average of 30.9×. The Technology median in the September 2026 study was 32.1×. Forward P/E is 21.2×, lower than trailing, so analysts expect earnings to grow.
- **PEG: 0.67**. A PEG of 0.67 means the P/E is low relative to expected earnings growth: the market is not paying much for that growth.
- **Price / sales: 11.2×**. Each dollar of revenue is priced at 11.2×, a level that requires very high margins or very fast growth to justify.
- **Price / book: 8.4×**. The shares trade at 8.4× book value; most of the value is in earnings power and intangibles rather than the balance sheet.
- **Free-cash-flow yield: 1.8%** (5-yr avg 2.5%). Free cash flow equals 1.8% of the market value, below its five-year average of 2.5%, so the shares are pricier on cash than usual.
- **Earnings yield: 3.6%**. The inverse of the P/E: 3.6% of the price is earned each year.

## Profitability
- **Gross margin: 67.9%**. Microsoft Corporation keeps 67.9% of revenue after the direct cost of what it sells, the kind of margin that comes with software, brands or pricing power.
- **Operating margin: 46.8%**. 46.8% of revenue is left after running the business, an exceptional level.
- **Net margin: 40.3%**. 40.3% of each dollar of sales reaches the bottom line.
- **Return on equity: 30.2%**. 30.2% on shareholders' equity is excellent if it is not driven by leverage; sustained above 20% usually signals a competitive advantage.
- **Return on invested capital: 26.6%**. Return on all capital, debt included, is 26.6%: comfortably above what that capital costs.
- **Return on assets: 17.6%**. Each dollar of assets produces 17.6% of profit.

## Growth
- **Revenue growth (1 yr): 17.8%** (3-yr 16.1%/yr, 5-yr 14.6%/yr). Revenue grew 17.8% over the last year, against 14.6% a year compounded over five years: growth is accelerating.
- **EPS growth (1 yr): 31.6%** (3-yr 22.9%/yr, 5-yr 17.4%/yr). Earnings per share rose 31.6%, faster than revenue, so margins expanded or the share count shrank.
- **Free-cash-flow growth (3 yr): 4.0%/yr**. Free cash flow has compounded at 4.0% a year over three years, lagging earnings: check whether profits are turning into cash.

## Financial health
- **Debt to equity: 0.09**. Debt is 0.09 times equity: a conservative balance sheet.
- **Current ratio: 1.23** (quick 1.23). Current assets cover the next year's liabilities 1.23 times.
- **Altman Z-score: 9.04**. A Z-score of 9.04 places the company in the safe zone for bankruptcy risk.
- **Piotroski F-score: 6/9**. 6 of 9 checks pass: mixed.

## Dividends
- **Dividend yield: 0.73%** ($3.64 per share, trailing). Microsoft Corporation yields 0.73%, a modest yield more typical of a growth-oriented payer.
- **Payout ratio: 20%** (39% of free cash flow). 20% of earnings goes out as dividends, leaving room to keep raising it.
- **Consecutive years of increases: 20**. 20 straight years of increases, a record that survived at least one recession.
- **Dividend growth (5 yr): 10.2%/yr** (1-yr 10.4%). The dividend has compounded at 10.2% a year over five years, doubling roughly every 7 years at that pace.

## Analyst view
- **Analyst consensus: strong_buy** (52 analysts). 52 analysts cover Microsoft Corporation; the consensus is strong_buy, with an average price target of $572.92 (+15% from the current price). Analyst opinion is shown for context; it is not part of the Fundamental Score.

## Price and momentum
- **Total return (1 yr): -1.0%** (YTD 3.8%, 3-mo 19.9%). The shares are down 1.0% over twelve months including dividends.
- **From 52-week high: -9.8%** (43.1% above the low). Trading 10% below its 52-week high.
- **200-day average: above**. The price sits above its 200-day moving average, the usual definition of an uptrend.
- **RSI (14-day): 59**. An RSI of 59 is neutral.
- **Beta (1 yr): 0.98** (volatility 33%). Beta of 0.98 against the S&P 500: the shares move roughly with the market.

Live score and charts: https://foliofundamentals.com/analyzer?s=MSFT · Page: https://foliofundamentals.com/stocks/msft

Not investment advice.