Microsoft Corporation
🇺🇸 MSFT · NYSE/NASDAQ · US5949181045
Technology
USD 421.92 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
25.1
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 421.92 ÷ 16.79 = 25.1
TTM period through: 2026-03-31
Forward P/E (estimated): 21.5
Based on analyst estimates
Reference: Provider P/E (Trailing): 24.2
Yield (Fwd)
0.86%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 0.88%
Div. Growth (5Y CAGR)
10.4%
Growth Streak
9 yrs
Consecutive years of increase
Net Debt/EBITDA (TTM)
0.1x
Latest quarter: -0.4x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-03-31
Latest quarter (2026-03-31): -0.4x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
21.7%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 20.6%
Cash Flow Payout (TTM): 15.2%
FCF Coverage (TTM): 2.82x
ROE
34.0%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
15.4x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
Microsoft is an undeniable global technology powerhouse with a pristine balance sheet and exceptional cash generation. However, its 0.88% dividend yield, elevated 25.13 P/E ratio, and classification in the fast-changing technology sector make it fundamentally incompatible with our strict conservative dividend value strategy. Not recommended for new positions, as better opportunities exist in traditional essential services with much higher starting yields.
Sector Context
Microsoft is a dominant global technology company providing essential software, cloud computing (Azure), and hardware solutions. While functioning almost as a modern utility for businesses, the technology sector is explicitly excluded from this strategy due to long-term risks of rapid technological obsolescence and its typical low-yield, high-valuation characteristics.
📊 Strategy Analysis
- • Phenomenal fundamental execution with a 10-year revenue CAGR of 11.9% and 9 consecutive years of dividend growth
- • Pristine balance sheet with a Net Debt/EBITDA of 0.12x, providing immense financial stability
- • Exceptionally safe payout profile with a cash flow payout ratio of just 15.20%
⚠ What to Watch
- • Current dividend yield of 0.88% falls drastically below the strategy's strict 3.0% minimum requirement for income generation
- • Valuation remains highly elevated at a TTM P/E of 25.13, far exceeding the targeted 8-15x value range
- • The Technology sector is explicitly excluded from our essential services focus due to strategy mismatch
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-05-16
Disclaimer: This information is for educational purposes only. Not financial advice.