MICROSOFT CORP (MSFT) Stock Analysis

Analysis from 10-Q filed 2025-10-29. Data as of Q1 2026.

Overall Grade: F (Concerning)

Grade F (Concerning). ROIC 27.0%. FCF margin 22.9%. D/E 0.1x. Source: 10-Q filed 2025-10-29.

Metric	Value	Context
ROIC	27.0%	Above industry average
FCF Margin	22.9%	Strong cash generation
Debt/Equity	0.1x	Conservative leverage

ROIC 27.0% — Top 25% of sector peers. FCF margin 22.9% — Top 25%.

Explore MICROSOFT CORP: Earnings History | Filings | ROIC Analysis

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 27.0% ROIC, Top 25% in Technology

ROIC TTM 27.0%, sector median 4.9%, Top 25%. DuPont: NOPAT margin 37.9% × asset turnover 0.5x. Gross margin 68.3%. Operating margin 46.8%. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
Return on Invested Capital (ROIC)	27.0%	Excellent	Above sector median of 4.9%
Return on Equity (ROE)	34.2%	Excellent	Efficient use of shareholder equity
Gross Margin	68.3%	Excellent	Strong pricing power
Operating Margin	46.8%	Excellent	Efficient operations

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Cash Flow: MICROSOFT CORP generates $72.9B FCF at 22.9% margin, positive NaN/8 quarters

FCF TTM $72.9B. FCF margin 22.9%, 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	22.9%	Excellent	Excellent cash conversion
Free Cash Flow (TTM)	$72.9B	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 $38.0B. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
Debt to Equity	0.1x	Excellent	Conservative capital structure
Net Cash Position	$38.0B	Excellent	Net cash positive

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Valuation: MICROSOFT CORP trades at 22.0x earnings

P/E 22.0x. EV/Sales 8.5x. FCF yield 2.7%. Dividend yield 1.0%. Source: 10-Q filed 2025-10-29.

Metric	MSFT	Rating	Context
P/E Ratio	22.0x	Adequate	Premium valuation
EV/Sales	8.5x	Adequate	Growth premium priced in
FCF Yield	2.7%	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 $48.7B 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)	$48.7B	Good	Dividends + buybacks returned to shareholders

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Sector Rankings

Metric	Value	Percentile	vs Median
Return on Invested Capital (ROIC)	27.0%	Top 25%	5.5x above
Free Cash Flow Margin	22.9%	Top 25%	2.7x above
Gross Margin	68.3%	Top 50%	1.3x above
Operating Margin	46.8%	Top 5%	9.7x above
Return on Equity (ROE)	34.2%	Top 25%	7.2x above
P/E Ratio	22.0x	N/A	-

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Financial Scorecard

Metric	MSFT	Rating	Sector Context
Return on Invested Capital (ROIC)	27.0%	Excellent	Top 25% of sector (median: 4.9%)
Free Cash Flow Margin	22.9%	Excellent	Top 25% of sector (median: 8.6%)
Gross Margin	68.3%	Excellent	Top 50% of sector (median: 51.6%)
Debt to Equity Ratio	9.7%	Excellent	Conservative capital structure
P/E Ratio (Price-to-Earnings)	22.0x	Adequate	Fair value
Free Cash Flow Yield	2.7%	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 27.0%. Sector median 4.9%. 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 22.9%, generating $72.9 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 22.0x, which is above the sector median of N/A. EV/Sales 8.5x. FCF yield 2.7%. 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 17.9% year-over-year. EPS +29.8% YoY. Source: 10-Q filed 2025-10-29.

Q: Is MICROSOFT CORP buying back stock?

MICROSOFT CORP (MSFT) repurchased $22.2 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 27.0%, sector median 4.9% (Top 25%). FCF margin 22.9%, sector median 8.6% (Top 25%). Gross margin 68.3%, 16.7pp 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 -2.2% 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 Q1 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.