Microsoft Corporation (MSFT) Valuation

Valuation

Model-based estimates, not advice. The DCF is the discounted-cash-flow value per share; compare it with the price, not as a target.

DCF fair value

-43.5%

$306.71

vs $543.01 price

Levered DCF

$340.70

After debt service

Piotroski score

6 / 9

Average

Altman Z-score

9.55

Safe zone

Rating

B+

Overall 3 / 5

Ratios by fiscal year

Margins and yields are shares of revenue, equity or price; multiples are ×.

Metric	FY2026	FY2025	FY2024	FY2023	FY2022	FY2021	FY2020	FY2019
P/E	20.72×	36.31×	38.51×	35.03×	26.48×	33.36×	34.97×	26.55×
P/B	6.26×	10.76×	12.64×	12.3×	11.56×	14.4×	13.09×	10.17×
P/S	8.35×	13.12×	13.85×	11.97×	9.71×	12.16×	10.83×	8.27×
EV / EBITDA	13.87×	23.6×	26.11×	24.54×	19.85×	24.81×	23.64×	19.23×
Gross margin	67.9%	68.8%	69.8%	68.9%	68.4%	68.9%	67.8%	65.9%
Operating margin	46.8%	45.6%	44.6%	41.8%	42.1%	41.6%	37.0%	34.1%
Net margin	40.3%	36.1%	36.0%	34.1%	36.7%	36.5%	31.0%	31.2%
Current ratio	1.23×	1.35×	1.27×	1.77×	1.78×	2.08×	2.52×	2.53×
Debt / equity	0.29×	0.33×	0.36×	0.39×	0.47×	0.58×	0.69×	0.84×
Interest coverage	50.88×	53.89×	37.29×	44.98×	40.42×	29.8×	20.44×	15.99×
Dividend yield	1.0%	0.7%	0.6%	0.8%	0.9%	0.8%	1.0%	1.3%
Payout ratio	19.8%	23.6%	24.7%	27.4%	24.9%	27.0%	34.2%	35.2%

Key metrics by fiscal year

Metric	FY2026	FY2025	FY2024	FY2023	FY2022	FY2021	FY2020	FY2019
Return on equity	30.2%	29.6%	32.8%	35.1%	43.7%	43.2%	37.4%	38.3%
Return on invested capital	20.6%	21.6%	22.3%	22.6%	26.3%	23.5%	18.8%	17.2%
Return on assets	17.6%	16.5%	17.2%	17.6%	19.9%	18.4%	14.7%	13.7%
Free cash flow yield	2.4%	1.9%	2.2%	2.3%	3.4%	2.7%	2.9%	3.7%
Earnings yield	4.8%	2.8%	2.6%	2.9%	3.8%	3.0%	2.9%	3.8%
Enterprise value	$2.9T	$3.8T	$3.5T	$2.6T	$2T	$2.1T	$1.6T	$1.1T
Net debt / EBITDA	0.52×	0.51×	0.6×	0.43×	0.64×	0.8×	1×	1.29×
Cash conversion cycle (days)	-52	-21	-17	-3	-7	-5	-3	23