Microsoft Corporation (MSFT) Stock Analysis — Fair Value, Risk & Moat Rating
NMS · Technology · Software - Infrastructure
Is Microsoft Corporation a safe investment right now?
Microsoft Corporation's Altman Z-Score of 8.77 places it in the safe zone. Our fair value estimate is $375.36 (Overvalued). Moat rating: 3.4/5 stars.
Could Microsoft Corporation go bankrupt? Altman Z-Score analysis
Z-Score of 8.77 is above 3.0, indicating the company is financially healthy by this metric.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives MSFT's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.0806 | 1.2 | 0.1 |
| B · Retained Earnings / Total Assets | RE / TA | 0.3841 | 1.4 | 0.54 |
| C · EBIT / Total Assets | EBIT / TA | 0.2036 | 3.3 | 0.67 |
| D · Market Cap / Total Liabilities | MCap / TL | 11.6782 | 0.6 | 7.01 |
| E · Revenue / Total Assets | Rev / TA | 0.4551 | 1.0 | 0.46 |
How has MSFT's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2022 | 11.62 | Safe |
| 2023 | 11.27 | Safe |
| 2024 | 9.67 | Safe |
| 2025 | 8.77 | Safe |
Source: Calculated from MSFT's latest 10-K filing on SEC EDGAR.
What is Microsoft Corporation actually worth?
How we calculated this
| Input | Value | Source |
|---|---|---|
| Predicted EPS (α) | $16.32 | Proprietary blend of reported actuals (2Q actual) + analyst consensus, weighted by α |
| Last Year EPS | $13.64 | Annual report (SEC EDGAR) |
| Analyst Consensus EPS (This Year) | $16.72 | 54 analysts consensus |
| Trailing P/E | 27.1x | Current market pricing |
| Fair P/E (β discount) | 23.0x | Trailing PE adjusted by value discount factor β, hard-capped |
| Earnings Trend (γ) | Stable | Directional signal: predicted vs trailing EPS |
Wall Street Reference: Analyst consensus target price is $579.57 (54 analysts). This is shown for reference only and is not used in our valuation model.
Source: Earnings data from SEC EDGAR filings. Market data via Yahoo Finance.
Does Microsoft Corporation have a durable competitive advantage?
Moat rating: 3.4/5.
What makes up MSFT's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 4/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 3/5.
How stable is MSFT's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2022 | 39.6% | — |
| 2023 | 36.0% | Declining |
| 2024 | 34.6% | Declining |
| 2025 | 32.6% | Declining |
Source: ROIC calculated from SEC EDGAR filings.
Is Microsoft Corporation's dividend safe?
Can Microsoft Corporation afford its dividend?
Payout ratio is 21.3%. FCF covers the dividend 3.6x. 24 consecutive years of payments.
Microsoft Corporation's key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $281.7B | $245.1B | $198.3B | Rising |
| Net Income | $101.8B | $88.1B | $72.7B | Rising |
| Free Cash Flow | $71.6B | $74.1B | $65.1B | Rising |
| Gross Margin | 68.8% | 69.8% | 68.4% | Stable |
Recent events that affect our MSFT analysis
MSFT earnings report scheduled
Upcoming report. Consensus EPS estimate: $4.07. Revenue estimate: $81.40B. Our current Fair Value: $375.36 — a significant beat or miss could shift this estimate.
MSFT analyst consensus: 95% bullish (53 of 56 analysts)
10 Strong Buy, 43 Buy, 3 Hold, 0 Sell, 0 Strong Sell. Consensus target: $579.57 (33.9% upside). Compare with our independent Fair Value: $375.36.
MSFT paid $0.9100/share dividend
Dividend Safety Grade: A. Payout ratio: 21.3%.
MSFT beat EPS estimates by 5.7%
Reported EPS: $4.14 vs estimate $3.92. Earnings strength supports our Fair Value of $375.36 (13.3% below current price).
MSFT filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT paid $0.9100/share dividend
Dividend Safety Grade: A. Payout ratio: 21.3%.
MSFT beat EPS estimates by 12.7%
Reported EPS: $4.13 vs estimate $3.66. Earnings strength supports our Fair Value of $375.36 (13.3% below current price).
MSFT filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT paid $0.8300/share dividend
Dividend Safety Grade: A. Payout ratio: 21.3%.
MSFT beat EPS estimates by 8.1%
Reported EPS: $3.65 vs estimate $3.38. Earnings strength supports our Fair Value of $375.36 (13.3% below current price).
MSFT filed annual report (10-K)
Annual filing with full-year financials. Our Altman Z-Score, Moat, and Fair Value models are derived from this data. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT paid $0.8300/share dividend
Dividend Safety Grade: A. Payout ratio: 21.3%.
MSFT beat EPS estimates by 7.4%
Reported EPS: $3.46 vs estimate $3.22. Earnings strength supports our Fair Value of $375.36 (13.3% below current price).
MSFT filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT paid $0.8300/share dividend
Dividend Safety Grade: A. Payout ratio: 21.3%.
MSFT beat EPS estimates by 3.5%
Reported EPS: $3.23 vs estimate $3.12. Earnings strength supports our Fair Value of $375.36 (13.3% below current price).
MSFT filed quarterly report (10-Q)
Quarterly update with interim financials. May signal changes to earnings trajectory and balance sheet health. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
MSFT filed 8-K (material event)
8-K filings disclose material events — acquisitions, leadership changes, or guidance revisions that may affect valuation. View on SEC EDGAR →
Common questions about Microsoft Corporation
What is Microsoft Corporation stock price today?
Microsoft Corporation (MSFT) stock price is $432.92 as of the latest market close, traded on the NASDAQ exchange.
What does Microsoft Corporation do?
Microsoft Corporation develops and supports software, services, devices, and solutions worldwide. The Productivity and Business Processes segment offers Microsoft 365 commercial, enterprise mobility + security, windows commercial, power BI, exchange, sharepoint, Microsoft teams, security and compliance, and copilot; Microsoft 365 commercial products, such as Windows commercial on-premises and office licensed services; Microsoft 365 consumer products and cloud services, including Microsoft 365 consumer subscriptions, office licensed on-premises, and other consumer services; LinkedIn; dynamics products and cloud services, such as dynamics 365, cloud-based applications, and on-premises ERP and CRM applications. Its Intelligent Cloud segment provides Server products and cloud services comprising Azure and other cloud services, GitHub, Nuance Healthcare, virtual desktop offerings, and other cloud services; server products, including SQL and windows server, visual studio and system center related client access licenses, and other on-premises offerings; enterprise and partner services, such as enterprise support and nuance professional services, industry solutions, Microsoft partner network, and learning experience.
What is Microsoft Corporation market cap?
Microsoft Corporation has a market capitalization of $3.22T, classifying it as a mega-cap stock in the Technology sector.
What sector and industry is MSFT in?
Microsoft Corporation operates in the Technology sector, specifically within the Software - Infrastructure industry. It trades on the NASDAQ under the ticker symbol MSFT.
Is MSFT stock overvalued or undervalued?
Based on our valuation model, Microsoft Corporation trades 15.3% above our fair value estimate — potentially overvalued.
- FairValueLabs Fair Value: $375.36
- Current Price: $432.92
- Valuation Zone: Overvalued
What is MSFT stock forecast and analyst target price?
Based on 54 Wall Street analysts, the consensus price target for Microsoft Corporation is $579.57, implying upside of 33.9% from the current price.
- Analyst High Target: $730.00
- Analyst Low Target: $392.00
Note: Analyst targets are shown for reference and are not used in our valuation model.
Is Microsoft Corporation revenue and earnings growing?
Here are the analyst consensus growth estimates for Microsoft Corporation:
- Revenue growth (current year est.): 16.5%
- EPS growth (current year est.): 22.6%
- Revenue growth (next year est.): 15.5%
- EPS growth (next year est.): 13.1%
What are Microsoft Corporation's key financial metrics?
| Metric | Latest | Trend |
|---|---|---|
| Revenue | $281.7B | Rising |
| Net Income | $101.8B | Rising |
| Free Cash Flow | $71.6B | Rising |
| Gross Margin | 68.8% | Stable |
What is MSFT's P/E ratio?
The price-to-earnings ratio measures how much investors pay per dollar of earnings:
- Trailing P/E (last 12 months): 27.1x
- Forward P/E (next 12 months est.): 22.9x
- FairValueLabs Fair P/E: 23.0x
How volatile is MSFT stock?
Microsoft Corporation has a beta of 1.11, meaning it is somewhat more volatile than the broader market. A beta above 1.0 indicates higher price swings relative to the S&P 500, while below 1.0 suggests more stability.
How much cash and debt does Microsoft Corporation have?
Microsoft Corporation's balance sheet shows:
- Total Cash: $89.46B
- Total Debt: $123.28B
- Net Cash Position: $-33.82B
A positive net cash position means the company holds more cash than debt, reducing financial risk.
What is Microsoft Corporation's free cash flow?
Microsoft Corporation generated $53.64B in trailing twelve-month free cash flow (from $160.51B in operating cash flow). Free cash flow represents the cash available for dividends, buybacks, and debt reduction after all capital expenditures.
Does Microsoft Corporation pay a dividend, and is it safe?
Yes, Microsoft Corporation pays a regular dividend. Here are the key metrics:
- Dividend Yield: 0.8%
- Payout Ratio: 21.3%
- Consecutive Years Paid: 24
- 5-Year Dividend Growth: -16.9%
- FairValueLabs Safety Grade: A
Is Microsoft Corporation at risk of going bankrupt?
Microsoft Corporation's Altman Z-Score is 8.77, placing it in the safe zone (above 3.0) — bankruptcy risk is low. The Z-Score uses five balance sheet ratios to predict bankruptcy probability within two years.
Does Microsoft Corporation have a durable competitive advantage?
Microsoft Corporation scores 3.4/5 stars (Narrow moat) in our moat analysis:
- ROIC Stability: 4/5
- Gross Margin Trend: 3/5
- Switching Costs: 3/5
A score above 3.5 suggests meaningful pricing power and a defensible market position.
What is MSFT's return on equity (ROE)?
Microsoft Corporation's return on equity is 34.4%. ROE measures how efficiently a company generates profits from shareholder equity. An ROE above 15% is generally considered strong, while below 10% may signal inefficiency.
How do I buy MSFT stock?
MSFT shares can be purchased through any brokerage account that provides access to the NASDAQ. Common steps:
- Open an account with a broker (e.g., Fidelity, Schwab, Interactive Brokers)
- Search for ticker symbol MSFT
- Place a market or limit order for your desired number of shares
This is not investment advice. Always do your own research before buying any stock.
Is MSFT a value stock or speculative?
FairValueLabs classifies Microsoft Corporation as Value Investment. It exhibits consistent profitability, reasonable valuation, and financial stability — characteristics of a traditional value investment.
Who is the CEO of Microsoft Corporation?
The current CEO of Microsoft Corporation is Mr. Satya Nadella.
What is MSFT's earnings per share (EPS)?
Earnings per share measures the company's profit allocated to each outstanding share:
- Trailing EPS (last 12 months): $15.97
- Forward EPS (next 12 months est.): $18.91
- Analyst consensus EPS (this year): $16.72
- Analyst consensus EPS (next year): $18.91
Other Technology companies analyzed by FairValueLabs
FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 22, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
MSFT analysis methodology: How we calculate fair value, Z-Scores, and moat ratings