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In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Microsoft (NASDAQ:MSFT) and its primary competitors in the Software industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.
Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Microsoft Corp | 38.30 | 11.31 | 13.84 | 8.19% | $44.43 | $52.43 | 18.1% |
| Oracle Corp | 68.74 | 35.05 | 14.49 | 13.12% | $6.12 | $10.04 | 12.17% |
| ServiceNow Inc | 115.47 | 17.43 | 15.93 | 3.65% | $0.65 | $2.49 | 22.38% |
| Palo Alto Networks Inc | 134.48 | 18.61 | 16.55 | 3.37% | $0.68 | $1.86 | 15.84% |
| Fortinet Inc | 34.34 | 32.05 | 10.53 | 21.88% | $0.56 | $1.32 | 13.64% |
| Nebius Group NV | 172.26 | 8.77 | 120.62 | 16.85% | $0.61 | $0.08 | 594.48% |
| Gen Digital Inc | 28.17 | 7.04 | 3.99 | 5.83% | $0.58 | $0.99 | 30.26% |
| UiPath Inc | 617 | 5.90 | 6.76 | 0.09% | $-0.02 | $0.3 | 14.38% |
| Monday.Com Ltd | 250.80 | 8.24 | 9.17 | 0.14% | $-0.01 | $0.27 | 26.64% |
| CommVault Systems Inc | 98.61 | 21.52 | 7.59 | 6.81% | $0.03 | $0.23 | 25.51% |
| Dolby Laboratories Inc | 25.86 | 2.58 | 5.07 | 1.78% | $0.07 | $0.27 | 9.25% |
| Qualys Inc | 25.85 | 9.22 | 7.51 | 9.4% | $0.06 | $0.14 | 10.32% |
| BlackBerry Ltd | 121.25 | 3.95 | 5.38 | 1.83% | $0.02 | $0.1 | 2.69% |
| Average | 141.07 | 14.2 | 18.63 | 7.06% | $0.78 | $1.51 | 64.8% |
By thoroughly analyzing Microsoft, we can discern the following trends:
At 38.3, the stock's Price to Earnings ratio is 0.27x less than the industry average, suggesting favorable growth potential.
With a Price to Book ratio of 11.31, significantly falling below the industry average by 0.8x, it suggests undervaluation and the possibility of untapped growth prospects.
The Price to Sales ratio is 13.84, which is 0.74x the industry average. This suggests a possible undervaluation based on sales performance.
The company has a higher Return on Equity (ROE) of 8.19%, which is 1.13% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $44.43 Billion, which is 56.96x above the industry average, implying stronger profitability and robust cash flow generation.
The company has higher gross profit of $52.43 Billion, which indicates 34.72x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company is witnessing a substantial decline in revenue growth, with a rate of 18.1% compared to the industry average of 64.8%, which indicates a challenging sales environment.
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When evaluating Microsoft alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
Microsoft is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.18.
This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
For Microsoft in the Software industry, the PE, PB, and PS ratios are all low compared to peers, indicating potential undervaluation. On the other hand, Microsoft's high ROE, EBITDA, and gross profit suggest strong profitability and operational efficiency. However, the low revenue growth rate may raise concerns about future performance compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: MSFT
