MMarketMath

MSFT

Fast growerQuality: High (80/100)

Microsoft · Information Technology · Systems Software

$487.31

52w 349.20 – 553.72

20y monthly, adjusted

Mkt cap

$3.62T

P/E

26.8

P/FCF

53.6

FCF yield

1.9%

ROE

30.2%

Shldr yield

1.4%

div 0.7% + bb 0.6%

What today's price assumes

At $3.62T, the market is pricing in 21.2% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 10.4% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $137 · $219 · $274 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 13.1× across 19 years, MSFT would trade near $322/share (25th–75th percentile: $201–$587); it trades at 19.8× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+16.1%

Rev 5y

+14.6%

Rev 10y

+13.8%

EPS 5y

+17.4%

EPS 10y

+21.5%

FCF 5y

+3.6%

FCF 10y

+10.4%

Fundamentals

Fiscal 2008–2026, from SEC filings

Revenue

2008: $60.4B
2009: $58.4B
2010: $62.5B
2011: $69.9B
2012: $73.7B
2013: $77.8B
2014: $86.8B
2015: $93.6B
2016: $91.2B
2017: $96.6B
2018: $110.4B
2019: $125.8B
2020: $143.0B
2021: $168.1B
2022: $198.3B
2023: $211.9B
2024: $245.1B
2025: $281.7B
2026: $331.8B
$0$100.0B$200.0B$300.0B
08
12
16
20
24

Net income

2008: $17.7B
2009: $14.6B
2010: $18.8B
2011: $23.1B
2012: $17.0B
2013: $21.9B
2014: $22.1B
2015: $12.2B
2016: $20.5B
2017: $25.5B
2018: $16.6B
2019: $39.2B
2020: $44.3B
2021: $61.3B
2022: $72.7B
2023: $72.4B
2024: $88.1B
2025: $101.8B
2026: $133.7B
$0$50.0B$100.0B
08
12
16
20
24

Free cash flow

2008: $18.4B
2009: $15.9B
2010: $22.1B
2011: $24.6B
2012: $29.3B
2013: $24.6B
2014: $27.0B
2015: $23.7B
2016: $25.0B
2017: $31.4B
2018: $32.3B
2019: $38.3B
2020: $45.2B
2021: $56.1B
2022: $65.1B
2023: $59.5B
2024: $74.1B
2025: $71.6B
2026: $67.0B
$0$20.0B$40.0B$60.0B
08
12
16
20
24

Diluted shares (lower is better)

2008: 9.5B
2009: 9.0B
2010: 8.9B
2011: 8.6B
2012: 8.5B
2013: 8.5B
2014: 8.4B
2015: 8.3B
2016: 8.0B
2017: 7.8B
2018: 7.8B
2019: 7.8B
2020: 7.7B
2021: 7.6B
2022: 7.5B
2023: 7.5B
2024: 7.5B
2025: 7.5B
2026: 7.5B
02.5B5.0B7.5B
08
12
16
20
24

Margins

20%40%60%80%08111417202326
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2008: $16.5B
2009: $13.8B
2010: $15.8B
2011: $16.7B
2012: $11.4B
2013: $12.8B
2014: $16.2B
2015: $24.3B
2016: $27.0B
2017: $23.6B
2018: $23.4B
2019: $33.4B
2020: $38.1B
2021: $43.9B
2022: $50.8B
2023: $42.0B
2024: $39.0B
2025: $42.5B
2026: $48.7B
$0$20.0B$40.0B
08
12
16
20
24

Cash vs long-term debt

$0$25.0B$50.0B$75.0B08111417202326
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q4'23: $56.2B
Q1'24: $56.5B
Q2'24: $62.0B
Q3'24: $61.9B
Q4'24: $64.7B
Q1'25: $65.6B
Q2'25: $69.6B
Q3'25: $70.1B
Q4'25: $76.4B
Q1'26: $77.7B
Q2'26: $81.3B
Q3'26: $82.9B
Q4'26: $90.0B
$0$25.0B$50.0B$75.0B
23
24
25
26
26

Net income by quarter

Q4'23: $20.1B
Q1'24: $22.3B
Q2'24: $21.9B
Q3'24: $21.9B
Q4'24: $22.0B
Q1'25: $24.7B
Q2'25: $24.1B
Q3'25: $25.8B
Q4'25: $27.2B
Q1'26: $27.7B
Q2'26: $38.5B
Q3'26: $31.8B
Q4'26: $35.8B
$0$10.0B$20.0B$30.0B
23
24
25
26
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q4'26 *$90.0B+17.7%$35.8B+31.3%4.80$55.4B
Q3'26$82.9B+18.3%$31.8B+23.1%4.27$46.7B
Q2'26$81.3B+16.7%$38.5B+59.5%5.16$35.8B
Q1'26$77.7B+18.4%$27.7B+12.5%3.72$45.1B
Q4'25 *$76.4B+18.1%$27.2B+23.6%3.65$42.6B
Q3'25$70.1B+13.3%$25.8B+17.7%3.46$37.0B
Q2'25$69.6B+12.3%$24.1B+10.2%3.23$22.3B
Q1'25$65.6B+16.0%$24.7B+10.7%3.30$34.2B
Q4'24 *$64.7B+15.2%$22.0B+9.7%2.94$37.2B
Q3'24$61.9B+17.0%$21.9B+19.9%2.94$31.9B
Q2'24$62.0B+17.6%$21.9B+33.2%2.93$18.9B
Q1'24$56.5B+12.8%$22.3B+27.0%2.99$30.6B
Q4'23 *$56.2B+8.3%$20.1B+20.0%2.68$28.8B

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+16.1%+14.6%+13.8%+10.9%
Operating cash flow+27.8%+19.0%+18.6%+13.6%
Free cash flow+4.0%+3.6%+10.4%+6.9%
EPS (diluted)+22.9%+17.4%+21.5%+13.5%
Equity+29.0%+25.5%+18.2%+14.6%
LT debt−9.6%−9.1%−2.6%+6.6%
Diluted shares−0.1%−0.4%−0.7%−0.9%
Stock price+14.9%+10.9%+25.3%+23.5%

$100, 3 years ago

$152vs $176 in SPY

14.9% vs 20.7%/yr

$100, 5 years ago

$168vs $181 in SPY

10.9% vs 12.6%/yr

$100, 10 years ago

$953vs $412 in SPY

25.3% vs 15.2%/yr

$100, 15 years ago

$2,367vs $813 in SPY

23.5% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$3.86

$1.38T created / $358.6B retained

Last 10 years

$6.44

$3.06T created / $475.4B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

38.6%

OCF ÷ (equity + debt)

OCF / EV yield

5.1%

MC vs 10× OCF

1.96

≤1 = priced under 10× OCF

Debt / FCF

0.5y

SBC / FCF

18.5%

Owner earnings

$54.6B

OCF − capex − SBC

OE yield

1.5%

Share count 5y

−1.3%

per year; negative = buybacks

Capital intensity

94.3%

net PP&E ÷ revenue

Sales efficiency

$1.55

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 44.7% of operating cash flow at an incremental return of 38.7% — an organically fundable growth rate of about 17.3% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

21 of 27 checks pass · 78%. Checks with structurally missing inputs are excluded.

Growth & Consistency

6/7

  • Revenue growth

    14.6% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    17.4% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    3.6% · 5y CAGR ≥ 5%

    fail

  • Revenue rises consistently

    9 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    10 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    19.0% vs 14.6% · OCF CAGR ≥ 0.9× revenue CAGR

    pass

Profitability

7/7

  • Net margin

    40.3% · ≥ 8%

    pass

  • Operating margin

    46.8% · ≥ 10%

    pass

  • Gross margin stable or rising

    67.9% vs 68.9% · no drop > 2 pts over 3y

    pass

  • Return on equity

    30.2% · ≥ 12%

    pass

  • Cash ROIC

    38.6% · ≥ 12%

    pass

  • FCF margin

    20.2% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $182.9B vs NI $133.7B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

5/5

  • Debt payable from cash flow

    0.5y · LT debt ≤ 3× FCF

    pass

  • Cash cushion

    67% · cash ≥ 50% of LT debt

    pass

  • Leverage

    0.07 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    $442.4B · equity > 0 and grew over ~5y

    pass

  • Interest burden

    2% · interest ≤ 15% of operating income

    pass

Capital Allocation

3/4

  • Share count flat or shrinking

    -1.3% · ≤ +0.5%/yr over ~5y

    pass

  • Stock comp restrained

    19% · SBC ≤ 15% of FCF

    fail

  • Distributions funded by FCF

    73% · dividends + buybacks ≤ 100% of FCF

    pass

  • Repurchases are a habit

    10 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

0/4

  • FCF yield

    1.9% · ≥ 3%

    fail

  • Earnings multiple

    26.8 · P/E ≤ 25

    fail

  • Price asks less than history delivered

    21.2% vs 10.4% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    1.4% · dividends + buybacks ≥ 2% of market cap

    fail

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
2026331,839225,465155,237133,74917.95182,935115,94866,98726,44522,27112,40520,93531,067442,3877,453
2025281,724193,893128,528101,83213.64136,16264,55171,61124,08218,42011,97430,24240,152343,4797,465
2024245,122171,008109,43388,13611.80118,54844,47774,07121,77117,25410,73418,31542,688268,4777,469
2023211,915146,05288,52372,3619.6887,58228,10759,47519,80022,2459,61134,70441,990206,2237,472
2022198,270135,62083,38372,7389.6589,03523,88665,14918,13532,6967,50213,93147,032166,5427,540
2021168,088115,85669,91661,2718.0576,74020,62256,11816,52127,3856,11814,22450,074141,9887,608
2020143,01596,93752,95944,2815.7660,67515,44145,23415,13722,9685,28913,57659,578118,3047,683
2019125,84382,93342,95939,2405.0652,18513,92538,26013,81119,5434,65211,35666,662102,3307,753
2018110,36072,00735,05816,5712.1343,88411,63232,25212,69910,7213,94011,94672,24282,7187,794
201796,57162,31029,02525,4893.2539,5078,12931,37811,84511,7883,2667,66376,07387,7117,832
201691,15458,37426,07820,5392.5633,3258,34324,98211,00615,9692,6686,51040,55783,0908,013
201593,58060,54218,16112,1931.4829,6685,94423,7249,88214,4432,5745,59527,80880,0838,254
201486,83359,75527,75922,0742.6332,5025,48527,0178,8797,3162,4468,66920,64589,7848,399
201377,84957,46426,76421,8632.5828,8334,25724,5767,4555,3602,4063,80412,60178,9448,470
201273,72356,19321,76316,9782.0031,6262,30529,3216,3855,0292,2446,93810,71366,3638,506
201169,94354,36627,16123,1502.6926,9942,35524,6395,18011,5552,1669,61011,92157,0838,593
201062,48450,08924,09818,7602.1024,0731,97722,0964,57811,2691,8915,5054,93946,1758,927
200958,43746,28220,36314,5691.6219,0373,11915,9184,4689,3531,7086,0763,74639,5588,996
200860,42048,82222,27117,6811.8721,6123,18218,4304,01512,5331,47910,339—36,2869,470

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗