MICROSOFT NDQ-MSFT RECENT

PRICE 442.94 P/ERATIO 35.4(Trailing:

Median: 23.0) P/E RATIO 1.91 YLD 0.7%
38.3 RELATIVE DIV’D VALUE
LINE
TIMELINESS 2 Raised 5/24/24 High:
Low:
39.0
26.3
50.0
34.6
56.8
39.7
64.1
48.0
87.5
61.9
116.2
83.8
159.5
97.2
232.9
132.5
349.7
211.9
338.0
213.4
384.3
219.4
468.3
366.5
Target Price Range
2027 2028 2029
SAFETY 1 Raised 5/26/06 LEGENDS
30.0 x ″Cash Flow″ p sh
TECHNICAL 2 Raised 8/2/24 . . . . Relative Price Strength
Options: Yes
800
BETA .85 (1.00 = Market) Shaded area indicates recession 600
500
18-Month Target Price Range 400
Low-High Midpoint (% to Mid) 300
250
$389-$681 $535 (20%) 200
2027-29 PROJECTIONS 150
Ann’l Total
Price Gain Return 100
High 735 (+65%) 14%
Low 605 (+35%) 9% 75
% TOT. RETURN 6/24
Institutional Decisions THIS VL ARITH.*
3Q2023 4Q2023 1Q2024 STOCK INDEX
Percent 21 1 yr. 32.3 8.3
to Buy 2300 2365 2323 shares 14
to Sell 2112 2372 2464 3 yr. 69.3 4.8
traded 7
Hld’s(000)516170452785775233825 5 yr. 249.0 63.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 © VALUE LINE PUB. LLC 27-29
6.60 6.56 7.21 8.35 8.80 9.34 10.54 11.66 11.78 12.54 14.38 16.47 18.89 22.36 26.56 28.51 32.95 37.85 Revenues per sh A 59.00
2.16 1.92 2.47 3.09 3.12 3.15 3.31 3.47 3.71 4.26 5.28 6.35 7.54 9.70 11.24 11.73 14.50 16.75 ‘‘Cash Flow’’ per sh 22.75
1.87 1.62 2.10 2.69 2.72 2.65 2.63 2.65 2.79 3.08 3.88 4.75 5.76 8.05 9.21 9.81 11.80 13.35 Earnings per sh B 20.00
.44 .52 .52 .64 .80 .89 1.12 1.24 1.44 1.56 1.68 1.84 2.04 2.24 2.48 2.72 3.08 3.40 Div’ds Decl’d per sh E■ 5.15
.35 .35 .23 .28 .28 .51 .67 .74 1.07 1.05 1.52 1.82 2.04 2.74 3.20 3.78 5.85 7.15 Cap’l Spending per sh 6.85
3.97 4.44 5.33 6.82 7.92 9.48 10.90 9.98 9.22 9.39 10.77 13.39 15.63 18.88 22.31 27.75 39.40 50.45 Book Value per sh D 75.45
9151.0 8908.0 8668.0 8376.0 8381.0 8328.0 8239.0 8027.0 7808.0 7708.0 7677.0 7643.0 7571.0 7519.0 7464.0 7432.0 7430.0 7400.0 Common Shs Outst’g C 7290.0
16.3 13.4 13.1 9.6 10.4 11.2 14.0 17.0 18.1 20.2 22.1 23.7 27.4 28.3 32.2 27.3 Bold figures are Avg Ann’l P/E Ratio 33.5
.98 .89 .83 .60 .66 .63 .74 .86 .95 1.02 1.19 1.26 1.41 1.53 1.86 1.58 Value Line Relative P/E Ratio 1.85
estimates
1.4% 2.4% 1.9% 2.5% 2.8% 3.0% 3.0% 2.7% 2.9% 2.5% 2.0% 1.6% 1.3% 1.0% .8% 1.0% Avg Ann’l Div’d Yield .8%
CAPITAL STRUCTURE as of 3/31/24 86833 93580 91964 96657 110360 125843 143015 168088 198270 211915 245000 280000 Revenues ($mill) A 430000
Total Debt $65442 mill. Due in 5 Yrs $18497 mill. 38.0% 36.5% 37.6% 39.4% 41.1% 43.4% 46.0% 48.5% 49.3% 48.9% 51.0% 50.0% Operating Margin 49.0%
LT Debt $42658 mill. LT Interest $1968 mill. 5212.0 5957.0 6622.0 8778.0 10261 11682 12796 11686 14460 13861 20000 25000 Depreciation ($mill) 20000
(21% of Cap’l)
22074 21885 22329 24084 30267 36830 44281 61271 69447 73307 87675 98790 Net Profit ($mill) 145800
Leases, Uncap’l $2784 mill. 20.7% 23.3% 18.8% 20.2% 17.0% 15.7% 16.5% 13.8% 17.0% 19.0% 18.0% 18.0% Income Tax Rate 18.0%
25.4% 23.4% 24.3% 24.9% 27.4% 29.3% 31.0% 36.5% 35.0% 34.6% 36.0% 35.5% Net Profit Margin 34.0%
No Defined Benefit Pension Plan 68621 74854 80303 95324 111174 106132 109605 95749 74602 80108 28750 50000 Working Cap’l ($mill) 75000
Pfd Stock None 20645 27808 40783 76073 72242 66662 59578 50074 47032 41990 42700 44000 Long-Term Debt ($mill) 48000
Common Stock 7,432,305,794 shs. 89784 80083 71997 72394 82718 102330 118304 141988 166542 206223 293000 373000 Shr. Equity ($mill) D 550000
as of 4/22/24 20.3% 20.6% 20.3% 17.0% 20.4% 22.6% 25.6% 32.5% 33.0% 29.9% 26.5% 24.0% Return on Total Cap’l 24.5%
MARKET CAP: $3.3 trillion (Large Cap) 24.6% 27.3% 31.0% 33.3% 36.6% 36.0% 37.4% 43.2% 41.7% 35.5% 30.0% 26.5% Return on Shr. Equity 26.5%
CURRENT POSITION 2022 2023 3/31/24 14.7% 15.0% 15.7% 16.9% 21.2% 22.5% 24.6% 31.5% 30.8% 25.7% 22.0% 19.5% Retained to Com Eq 19.5%
($MILL.) 40% 45% 49% 49% 42% 37% 34% 27% 26% 28% 26% 26% All Div’ds to Net Prof 26%
Cash Assets 104757 111262 80021
Receivables 44261 48688 44029 BUSINESS: Microsoft Corp. is the largest independent maker of puting, 26%. R&D, 12.8% of 2023 revenues. Employed 221,000 at
Inventory (Avg Cst) 3742 2500 1304 software. It develops and sells software products for a wide range 6/30/23. Stock owners: Offs. & dirs., less than 1%; The Vanguard
Other 16924 21807 21826
of computing environments in consumer and enterprise markets. Group, 8.6%; BlackRock, Inc., 7.1%. (10/23 proxy). Chairman &
Current Assets 169684 184257 147180
Hardware products include the Xbox video game console and Sur- CEO: Satya Nadella. Incorporated: Washington. Addr.: One Micro-
Accts Payable 19000 18095 18087
Debt Due 2749 5247 22784 face laptops. Revenue sources in fiscal 2023: Productivity & Busi- soft Way, Redmond, Washington 98052-6399. Telephone: 425-
Unearned Revenue 45538 50901 41888 ness Processes, 33%; Intelligent Cloud, 41%; More Personal Com- 882-8080. Internet: www.microsoft.com.
Other 27795 29906 35766
Current Liab. 95082 104149 118525 Microsoft will probably post solid re- 33,000 customers, and that figure has like-
sults for the June quarter, building on ly grown. The number of Azure deals rose
ANNUAL RATES Past Past Est’d ’21-’23
of change (per sh) 10 Yrs. 5 Yrs. to ’27-’29 a healthy performance from the significantly during the third quarter,
Revenues 11.5% 15.0% 15.0% March period. (Note: Microsoft was with billion-dollar multi-year commit-
‘‘Cash Flow’’ 13.5% 20.0% 13.0% scheduled to issue its fourth-quarter earn- ments coming from organizations like The
Earnings 13.0% 22.5% 14.0% ings release shortly after this report went Coca-Cola Company. Additionally, Micro-
Dividends 12.5% 9.5% 13.0%
Book Value 11.0% 18.5% 22.0% to press.) The company wrapped up the soft Copilot and Copilot stack are driving a
Fiscal Full
third quarter (fiscal year ends June 30, new era of AI transformation. During the
QUARTERLY REVENUES ($ mill.) A
Year
Sep.30 Dec.31 Mar.31 Jun.30 Fiscal 2024) with higher sales figures. Year-over- March quarter, Azure gained substantial
Ends Year year, quarterly net sales increased 17%, market share as customers used Micro-
2021 37154 43076 41706 46152 168088 from $52.9 billion to $61.9 billion. It’s like- soft’s platforms and tools to build their
2022 45317 51728 49360 51865 198270
2023 50122 52747 52857 56189 211915 ly that this trend continued, although not own AI solutions. As Microsoft continues
2024 56517 62020 61858 64605 245000 as robust. We expect June quarter sales to to blend AI across all layers of the compa-
2025 66000 70500 70300 73200 280000 have increased 15% year over year. Fur- ny, it’s gaining new customers and ad-
Fiscal Full thermore, we think the June quarter will vancing efficiency.
EARNINGS PER SHARE AB
Year
Sep.30 Dec.31 Mar.31 Jun.30 Fiscal reflect growth driven by continued Capital expenditures are expected to
Ends Year
strength in Microsoft Cloud. Microsoft’s increase. Management noted that AI
2021 1.82 2.03 2.03 2.17 8.05 Intelligent Cloud unit, including the Azure demand is trending above available capac-
2022 2.27 2.48 2.22 2.23 9.21
2023 2.35 2.32 2.45 2.69 9.81 public cloud, Windows Server, Nuance, ity. To meet this need, investments will be
2024 2.99 2.93 2.94 2.94 11.80 and GitHub, produced $26.7 billion in rev- made in cloud and AI infrastructure.
2025 3.35 3.30 3.30 3.40 13.35 enue during the third quarter. Shares of Microsoft offer above-
QUARTERLY DIVIDENDS PAID E■ The outlook is bright. We expect contin- average capital appreciation poten-
Cal- Full
endar Mar.31 Jun.30 Sep.30 Dec.31 Year ued growth from the tech giant, with sig- tial. Our current projections point to at-
nificant contributions from Azure and AI tractive upside potential over both the 18-
2020 .51 .51 .51 .56 2.09 transformation. During the third quarter, month and 3- to 5-year time frames. The
2021 .56 .56 .56 .62 2.30 there was a substantial increase in the company also receives our top grade for Fi-
2022 .62 .62 .62 .68 2.54
2023 .68 .68 .68 .75 2.79 number of Azure AI customers. At the end nancial Strength (A++).
2024 .75 .75 of March, Azure Arc had approximately Kathleen Uckert August 2, 2024
(A) Fiscal year ends June 30th. d37¢; billion, $10.39 a share. Company’s Financial Strength A++
(B) Diluted earnings. Quarters may not sum to ’18, d$1.75; ’19, d33¢; ’22, 44¢; ’23, 13¢. Next (E) Dividends historically paid in March, June, Stock’s Price Stability 95
toal due to rounding. Excl. nonrec. items: ’12, earnings report due late October. (C) In mill. Sept., and Dec. ■Dividend reinvestment plan Price Growth Persistence 100
d72¢; ’13, d7¢; ’15, d$1.17; ’16, d70¢; ’17, (D) Includes intangibles. In fiscal 2023: $77.3 available. Earnings Predictability 95
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