MSFT
MICROSOFT CORP
Technology • CIK: 0000789019
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Market Cap
$3.59T
P/E (TTM)
30.1x
Rev Growth (TTM)
+16.7%
Net Margin (TTM)
39.0%
FCF Yield (TTM)
2.2%
FCF Margin (TTM)
25.3%
What Changed
10-Q Q2 FY2026 vs 10-Q Q1 FY2026
Hidden Liability Risk Levelmoderate→low
Total Debt$43.21 billion→$40,262 million (~$40.3B)
Near-Term Debt Maturities (12-Month Window)$3.00 billion due within 12 months→$0 million due in next 6 months; $9,250 million due in...
Accounting Red Flags0 red flags→1 red flag: intangible assets amortization expense...
Regulatory Risk SeverityRegulatory and AI Governance (high severity)→Regulatory and Legal Environment — AI/Competition...
Intangible asset amortization: new red flag in Q2 — watch Q3 FY2026 10-Q for...·LinkedIn IDPC GDPR fine: appeal is ongoing — watch for final fine amount...·Intelligent Cloud (Azure) segment growth: 28.82% in Q2 FY2026 — monitor whether...
Filing Intelligence
6.0/10
10-Q filed Jan 28, 2026 • FYNone
Executive Summary
Significant revenue growth driven by Intelligent Cloud (Azure) and Productivity and Business Processes (Microsoft 365 Commercial), while More Personal Computing saw a slight decline.. Gross margin...
Key Concerns
- ●Significant revenue growth driven by Intelligent Cloud (Azure) and Productivity and Business Processes (Microsoft 365 Commercial), while...
- ●Intangible assets amortization expense decreased significantly year-over-year, warranting further investigation into the nature of these...
- ●Irish Data Protection Commission (IDPC) matter against LinkedIn for alleged GDPR violations, with a fine assessed and an ongoing appeal.
Cash Flow Health
Free Cash Flow8/8 positive
TTM$77.4B
Q2 '26
$5.9B-77%
Q1 '26
$25.7B+0%
FCF Margin
TTM25.3%
Q2 '267.2%-78%
Sector: 9.1%Top 25%
OCF Margin52.5%
OCF/NI1.35x
CapEx Coverage1.9x
FCF Yield2.2%
FCF Growth (2Y)+9%
Cash Conversion Cycle
-39 days
DSO: 68+DIO: 4−DPO: 111
Capital Allocation & Returns
Growth Focused
Total Shareholder YieldTTM
TTM1.3%
Div Yield0.7%
+Buyback (TTM)0.6%
Prioritizing reinvestment over distributions
Dividend & Payout Metrics
Dividend Yield (TTM)0.7%
FCF Payout Ratio33.4%
Free Cash Flow (TTM)$77.4B
Stock Repurchases (TTM)$22.4B
Capital Return / FCF62.3%
Est. Dividends Paid (TTM)$25.9B
Shows how management rewards shareholders
Operational Efficiency & Returns
Return on Invested CapitalTTM
27.4%
Stable
-0.0% YoY-1.5%
P25MedianP75
75th pctl (med: 0.1%)
DuPont BreakdownROIC = Margin × Turn × (1+D/E)
NOPAT Margin
38.0%
8Q: 37.5%
Asset Turnover
0.51x
8Q: 0.51x
Leverage (1+D/E)
1.10x
D/E: 0.10x
DuPont: 21.2% ≈ 27.4% ROIC
Asset & CapEx Efficiency
Fixed Asset Turn
1.47x
8Q:1.67x
-78.4%
Invested Cap Turn
0.72x
8Q:0.75x
-9.7%
CapEx Intensity
19.7%
8Q:17.3%
CapEx/Depreciation
1.97x
Depreciation Rate Trend
⚠ Declining -47.9%
Asset-based ROIC formula
QUARTERLY TRENDS
Last 8 quarters + TTM
| Metric | TTM | Q2 2026 | Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 |
|---|---|---|---|---|---|---|---|---|---|
Revenue | $305.5B | $81.3B↑4.6% | $77.7B↑1.6% | $76.4B↑9.1% | $70.1B↑0.6% | $69.6B↑6.2% | $65.6B↑1.3% | $64.7B↑4.6% | $61.9B |
Operating Income | $142.6B | $38.3B↑0.8% | $38.0B↑10.6% | $34.3B↑7.3% | $32.0B↑1.1% | $31.7B↑3.6% | $30.6B↑9.4% | $27.9B↑1.2% | $27.6B |
Net Income | $119.3B | $38.5B↑38.6% | $27.7B↑1.9% | $27.2B↑5.5% | $25.8B↑7.1% | $24.1B↓2.3% | $24.7B↑11.9% | $22.0B↑0.4% | $21.9B |
Operating Cash Flow | $160.5B | $35.8B↓20.6% | $45.1B↑5.7% | $42.6B↑15.1% | $37.0B↑66.2% | $22.3B↓34.8% | $34.2B↓8.1% | $37.2B↑16.5% | $31.9B |
Free Cash Flow | $77.4B | $5.9B↓77.1% | $25.7B↑0.4% | $25.6B↑26.0% | $20.3B↑212.9% | $6.5B↓66.3% | $19.3B↓17.4% | $23.3B↑11.2% | $21.0B |
Total Equity | N/A |
Valuation Analysis
Fair Value
Price-to-EarningsTTM
30.1x
Volatile
8Q: 132.8x-3413%
Valuation Lenses
Earnings
30.1x
vs – sector
Cash Flow
43.7x
EV/FCF vs –
Growth-Adj
1.0xPEG
Fair for growth
Quality-Adj
1.1P/E per %ROIC
ROIC: 27.4%
Shareholder Returns
Dividend
0.7%
Buyback
0.6%
Total Yield
1.3%
Market Cap$3.59T
EV–
Multi-angle valuation analysis with sector context
Business Quality & Moat
Overall Quality Score
99/100
Exceptional
Composite score: Returns (40%) + Consistency (30%) + Earnings Quality (30%)
Returns on Capital
Return on Equity (ROE)Top 25%
34.7%
8Q:–
Return on Invested Capital (ROIC)Top 25%
27.4%
8Q:–
Flat
vs Sector:0.1%
DuPont Analysis (ROIC = NOPAT Margin × Asset Turnover)
NOPAT Margin: 38.0%
Asset Turnover: 0.51x
Earnings Quality
Cash Conversion
1.35x
OCF / Net Income ✓
FCF Consistency
–
Positive quarters
Competitive Moat Indicators
Pricing Power
Gross Margin68.6%
Capital Efficiency
Invested Capital Turnover0.72x
Working Capital
Cash Conversion Cycle-39 days
Growth Quality & Momentum
Moderate Growth
Growth Quality Score
71/100
Growth 40%
Margins 30%
FCF 20%
Consistency 10%
Growth Rates
Revenue Growth YoY
16.7%
OpInc Growth YoY
20.9%
EPS Growth YoY
28.7%
FCF 3Y CAGR
9.1%
Margin Quality & Sustainability
Low Quality
Profitability Cascade
Gross
68.6%
Operating
46.7%
Top 25% in sector
Net
39.0%
Margins Unknown
Earnings Quality Signals
SBC / Revenue
—
FCF vs Net Gap
-13.7 pts
FCF: 25.3% | Net: 39.0%
FCF margin lags net margin by 13.7 pts
Quality = stability + cash conversion + low dilution
Balance Sheet & Solvency
Fortress
Net Debt / EBITDA
Net Cash
(0.0x)Net Cash: $49.20B
Interest Coverage
–
+Net cash position: $49.20B
Balance sheet risk & solvency analysis