MICROSOFT CORP (MSFT) Stock Analysis

Analysis from 10-Q filed 2025-10-29. Data as of Q2 2026.

Overall Grade: F (Concerning)

Grade F (Concerning). ROIC 26.6%. FCF margin 20.2%. D/E 0.1x. Source: 10-Q filed 2025-10-29.

Metric	Value	Context
ROIC	26.6%	Above industry average
FCF Margin	20.2%	Strong cash generation
Debt/Equity	0.1x	Conservative leverage

ROIC 26.6% — Top 10% of sector peers. FCF margin 20.2% — Top 25%.

Explore MICROSOFT CORP: Earnings History | Filings

Programmatic access: Available via MCP at mcp.metricduck.com. Tools for MSFT: get_company_overview, get_filing_index (lens: debt_stress, management_outlook, risk_trajectory), get_filing_changes, get_metric_history, compare_companies, screen_filing_signals.

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Profitability: MICROSOFT CORP earns 26.6% ROIC, Top 10% in Technology

ROIC TTM 26.6%, sector median 3.9%, Top 10%. DuPont: NOPAT margin 37.7% × asset turnover 0.5x. Gross margin 67.9%. Operating margin 46.8%. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
Return on Invested Capital (ROIC)	26.6%	Excellent	Above sector median of 3.9%
Return on Equity (ROE)	34.3%	Excellent	Efficient use of shareholder equity
Gross Margin	67.9%	Excellent	Strong pricing power
Operating Margin	46.8%	Excellent	Efficient operations

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Cash Flow: MICROSOFT CORP generates $67.0B FCF at 20.2% margin, positive NaN/8 quarters

FCF TTM $67.0B. FCF margin 20.2%, Top 25%. OCF/Net income 1.4x. Positive FCF in NaN/8 trailing quarters. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
Free Cash Flow Margin	20.2%	Excellent	Excellent cash conversion
Free Cash Flow (TTM)	$67.0B	Good	Positive cash generation
OCF/Net Income	1.4x	Excellent	High earnings quality
FCF Consistency (8Q)	N/A	Warning	Variable cash flow

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Balance Sheet: MICROSOFT CORP at 0.1x leverage

Debt/Equity 0.1x. Net cash $36.5B. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
Debt to Equity	0.1x	Excellent	Conservative capital structure
Net Cash Position	$36.5B	Excellent	Net cash positive

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Valuation: MICROSOFT CORP trades at 20.7x earnings

P/E 20.7x. EV/Sales 10.0x. FCF yield 2.4%. Dividend yield 1.0%. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
P/E Ratio	20.7x	Adequate	Premium valuation
EV/Sales	10.0x	Adequate	Growth premium priced in
FCF Yield	2.4%	Adequate	Lower cash yield
Dividend Yield	1.0%	Adequate	Growth focus over income

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Capital Allocation: MICROSOFT CORP returns 1.8% shareholder yield

Total shareholder yield 1.8% (div 1.0% + buyback 0.8%). Capital returned $49.3B TTM. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
Total Shareholder Yield	1.8%	Adequate	Dividend + buyback yield combined
Buyback Yield	0.8%	Adequate	Minimal buyback activity
Total Capital Returned (TTM)	$49.3B	Good	Dividends + buybacks returned to shareholders

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Sector Rankings

Metric	Value	Percentile	vs Median
Return on Invested Capital (ROIC)	26.6%	Top 10%	6.9x above
Free Cash Flow Margin	20.2%	Top 25%	2.4x above
Gross Margin	67.9%	Top 50%	1.3x above
Operating Margin	46.8%	Top 5%	10.3x above
Return on Equity (ROE)	34.3%	Top 25%	6.8x above
P/E Ratio	20.7x	N/A	-

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Financial Scorecard

Metric	MSFT	Rating	Sector Context
Return on Invested Capital (ROIC)	26.6%	Excellent	Top 10% of sector (median: 3.9%)
Free Cash Flow Margin	20.2%	Excellent	Top 25% of sector (median: 8.3%)
Gross Margin	67.9%	Excellent	Top 50% of sector (median: 50.6%)
Debt to Equity Ratio	9.1%	Excellent	Conservative capital structure
P/E Ratio (Price-to-Earnings)	20.7x	Adequate	Fair value
Free Cash Flow Yield	2.4%	Warning	Growth-focused valuation

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Frequently Asked Questions

Q: What is MICROSOFT CORP's Return on Invested Capital (ROIC)?

MICROSOFT CORP (MSFT) has a trailing twelve-month Return on Invested Capital (ROIC) of 26.6%. Sector median 3.9%. Source: 10-Q filed 2025-10-29.

Q: What is MICROSOFT CORP's Free Cash Flow Margin?

MICROSOFT CORP (MSFT) has a free cash flow margin of 20.2%, generating $67.0 billion in free cash flow over the trailing twelve months. Source: 10-Q filed 2025-10-29.

Q: What is MICROSOFT CORP's P/E ratio and how does it compare to peers?

MICROSOFT CORP (MSFT) trades at a P/E ratio of 20.7x, which is above the sector median of N/A. EV/Sales 10.0x. FCF yield 2.4%. Source: 10-Q filed 2025-10-29.

Q: Does MICROSOFT CORP pay a dividend?

MICROSOFT CORP (MSFT) currently pays a dividend yield of 1.0%. Total shareholder yield (dividend + buybacks) 1.8%. Source: 10-Q filed 2025-10-29.

Q: What is MICROSOFT CORP's revenue and earnings growth?

MICROSOFT CORP (MSFT) grew revenue by 17.8% year-over-year. EPS +31.6% YoY. Source: 10-Q filed 2025-10-29.

Q: Is MICROSOFT CORP buying back stock?

MICROSOFT CORP (MSFT) repurchased $22.3 billion of stock over the trailing twelve months. This represents a buyback yield of 0.8%. Source: 10-Q filed 2025-10-29.

Q: How does MICROSOFT CORP compare to competitors in Technology?

Compared to other companies in Technology, MICROSOFT CORP (MSFT) shows: ROIC 26.6%, sector median 3.9% (Top 10%). FCF margin 20.2%, sector median 8.3% (Top 25%). Gross margin 67.9%, 17.3pp above sector median. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.

Q: What warning signs should I watch for with MICROSOFT CORP?

Quantitative warning flags for MICROSOFT CORP (MSFT): 1) ROIC declining -2.9% over 8 quarters. Source: 10-Q filed 2025-10-29.

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Data Source: Data sourced from 10-Q filed 2025-10-29. TTM metrics as of Q2 2026.

Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.

Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.

This analysis is for informational purposes only and does not constitute investment advice.