MSFT
MICROSOFT CORP
Technology • CIK: 0000789019
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Market Cap
$2.75T
P/E (TTM)
22.0x
Rev Growth (TTM)
+17.9%
Net Margin (TTM)
39.3%
FCF Yield (TTM)
2.7%
FCF Margin (TTM)
22.9%
Cash Flow Health
Free Cash Flow8/8 positive
TTM$72.9B
Q3 '26
$15.8B+169%
Q2 '26
$5.9B-77%
FCF Margin
TTM22.9%
Q3 '2619.1%+163%
Sector: 8.5%Top 25%
OCF Margin53.5%
OCF/NI1.36x
CapEx Coverage1.7x
FCF Yield2.7%
FCF Growth (2Y)+8%
Cash Conversion Cycle
-46 days
DSO: 67+DIO: 4−DPO: 117
Capital Allocation & Returns
Growth Focused
Total Shareholder YieldTTM
TTM1.8%
Div Yield1.0%
+Buyback (TTM)0.8%
Prioritizing reinvestment over distributions
Dividend & Payout Metrics
Dividend Yield (TTM)1.0%
FCF Payout Ratio36.3%
Free Cash Flow (TTM)$72.9B
Stock Repurchases (TTM)$22.2B
Capital Return / FCF66.8%
Est. Dividends Paid (TTM)$26.5B
Shows how management rewards shareholders
Operational Efficiency & Returns
Return on Invested CapitalTTM
27.0%
Stable
-0.0% YoY-2.2%
P25MedianP75
75th pctl (med: 0.0%)
DuPont BreakdownROIC = Margin × Turn × (1+D/E)
NOPAT Margin
37.9%
8Q: 37.5%
Asset Turnover
0.50x
8Q: 0.51x
Leverage (1+D/E)
1.10x
D/E: 0.10x
DuPont: 20.8% ≈ 27.0% ROIC
Asset & CapEx Efficiency
Fixed Asset Turn
1.37x
8Q:1.59x
-75.3%
Invested Cap Turn
0.71x
8Q:0.74x
-9.8%
CapEx Intensity
21.7%
8Q:17.4%
CapEx/Depreciation
2.09x
Depreciation Rate Trend
⚠ Declining -24.8%
Asset-based ROIC formula
QUARTERLY TRENDS
Last 8 quarters + TTM
| Metric | TTM | Q3 2026 | Q2 2026 | Q1 2026 | Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 |
|---|---|---|---|---|---|---|---|---|---|
Revenue | $318.3B | $82.9B↑2.0% | $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 |
Operating Income | $149.0B | $38.4B↑0.3% | $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 |
Net Income | $125.2B | $31.8B↓17.4% | $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 |
Operating Cash Flow | $170.1B | $46.7B↑30.5% | $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 |
Free Cash Flow | $72.9B | $15.8B↑168.7% | $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 |
Total Equity | N/A |
Valuation Analysis
Fair Value
Price-to-EarningsTTM
22.0x
Volatile
8Q: 129.9x-4809%
Valuation Lenses
Earnings
22.0x
vs – sector
Cash Flow
37.0x
EV/FCF vs –
Growth-Adj
0.7xPEG
Undervalued for growth
Quality-Adj
0.8P/E per %ROIC
ROIC: 27.0%
Shareholder Returns
Dividend
1.0%
Buyback
0.8%
Total Yield
1.8%
Market Cap$2.75T
EV$2.70T
Multi-angle valuation analysis with sector context
Business Quality & Moat
Overall Quality Score
98/100
Exceptional
Composite score: Returns (40%) + Consistency (30%) + Earnings Quality (30%)
Returns on Capital
Return on Equity (ROE)Top 25%
34.2%
8Q:–
Return on Invested Capital (ROIC)Top 25%
27.0%
8Q:–
-2.2%
vs Sector:0.0%
DuPont Analysis (ROIC = NOPAT Margin × Asset Turnover)
NOPAT Margin: 37.9%
Asset Turnover: 0.50x
Earnings Quality
Cash Conversion
1.36x
OCF / Net Income ✓
FCF Consistency
–
Positive quarters
Competitive Moat Indicators
Pricing Power
Gross Margin68.3%
Capital Efficiency
Invested Capital Turnover0.71x
Working Capital
Cash Conversion Cycle-46 days
Growth Quality & Momentum
Moderate Growth
Growth Quality Score
72/100
Growth 40%
Margins 30%
FCF 20%
Consistency 10%
Growth Rates
Revenue Growth YoY
17.9%
OpInc Growth YoY
20.0%
EPS Growth YoY
29.8%
FCF 3Y CAGR
8.3%
Margin Quality & Sustainability
Low Quality
Profitability Cascade
Gross
68.3%
Operating
46.8%
Top 25% in sector
Net
39.3%
Margins Unknown
Earnings Quality Signals
SBC / Revenue
—
FCF vs Net Gap
-16.4 pts
FCF: 22.9% | Net: 39.3%
FCF margin lags net margin by 16.4 pts
Quality = stability + cash conversion + low dilution
Balance Sheet & Solvency
Fortress
Net Debt / EBITDA
Net Cash
(0.0x)Net Cash: $38.01B
Interest Coverage
–
+Net cash position: $38.01B
Leverage Metrics
Debt-to-Equity
0.10x
Balance sheet risk & solvency analysis