Stock (Symbol) |
Microsoft (MSFT) |
Stock Price |
$295 |
Sector |
Technology |
Data is as of |
April 26, 2023 |
Expected to Report |
July 31 |
Company Description |
![]() The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. This segment includes Office Consumer, LinkedIn, dynamics business solutions, and Office Commercial. The Intelligent Cloud segment consists of public, private, and hybrid server products and cloud services that can power modern businesses and developers. This segment includes server products and cloud services, and enterprise services. The More Personal Computing segment consists of products and services that put customers at the center of the experience with its technology. This segment includes Windows, devices, gaming, and search and news advertising.. Source: Refinitiv |
Sharek’s Take |
![]() Founded in 1975, Microsoft develops and supports software, services, devices and solutions that help people in business. Products include computer operating systems such as Windows, productivity applications including Excel and Word, software development tools including Azure, computing devices with its Surface tablets, and video games with its Xbox devices. The company also owns the top social media site for business relationships in LinkedIn. Microsoft has three main divisions, which are listed below, with each bringing in around 1/3rd of revenue. Here’s the breakdown of last qtr’s sales growth by division (note commercial cloud isn’t listed):
Microsift is one of only two companies to hold a AAA credit rating. The other being Johnson & Johnson. MSFT stock has good momentum with AI, but this company isn’t a rapid grower like it used to be. Its a conservative stock with an Estimated Long-Term Growth Rate of just 12% a year, a dividend yield of 1%, and a stock buyback program. The dividend has been increasing every year since 2006. MSFT is part of the Conservative Growth Portfolio. Profit growth is accelerating, thus I feel the stock goes higher from here. |
One Year Chart |
![]() Notice quarterly profit growth just went from -6% to +10%, with +15% on deck for next quarter. Six qtrs ago, MSFT had a P/E of 36. Now, with a P/E of 27, this stock is a lot less expensive than it used to be. note, MSFT has a fiscal year end of June 30. Since we are already in May, I calculated te P/E based on next year’s estimates. The Est. LTG is 12%, unchanged since last qtr. |
Earnings Table |
![]() Revenue growth was driven by strong product renewals and installed base expansion across all workloads and customers in Office 365 Commercial, which was led by small and medium businesses, as well as share gains in Azure and server services. These growth trends were partially offset by softer PC demand as elevated inventory levels adversely affected the business. Annual Profit Estimates increased across the board this qtr. Qtrly Profit Estimates are for 15%, 11%, 16%, and 12% profit growth the next 4 qtrs. These estimates increased too. For next qtr, management expects commercial bookings growth to be flat as they lap a very strong bookings growth last year. For Productivity and Business Processes, management expects revenue to grow 10% to 12% in constant currency, led by Office 365. For Intelligent Cloud, they expect revenue to grow 15% to 16%, driven by Azure. For More Personal Computing, due to weak PC demand, they expect revenue to lag overall market growth. Analysts believe Microsoft’s revenue will grow 7% next quarter. |
Fair Value |
![]() Note in this table I’m looking ahead to next year when looking at a Fair Value. There’s 11% upside for 2024, which is a decent figure. And with the company upping annual estimates, this profit estimate could continue to rise. Microsoft has a Fiscal Year End on June 30th. |
Bottom Line |
![]() Microsoft’s parternship with OpenAI is combining Azure, Bing, and Office with with ChatGPT. This company has a lot of growth opporunity ahead. MSFT jumps from 20th to 11th in the Conservative Stock Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 11 of 32 |