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In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. In this article, we will conduct a comprehensive industry comparison, evaluating Microsoft (NASDAQ:MSFT) against its key competitors in the Software industry. By examining key financial metrics, market position, and growth prospects, we aim 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 | 37.65 | 11.11 | 13.61 | 8.19% | $44.43 | $52.43 | 18.1% |
| Oracle Corp | 69.21 | 35.29 | 14.59 | 13.12% | $6.12 | $10.04 | 12.17% |
| ServiceNow Inc | 114.62 | 17.30 | 15.81 | 3.65% | $0.65 | $2.49 | 22.38% |
| Palo Alto Networks Inc | 129.72 | 17.96 | 15.97 | 3.37% | $0.68 | $1.86 | 15.84% |
| Fortinet Inc | 33.10 | 30.90 | 10.15 | 21.88% | $0.56 | $1.32 | 13.64% |
| Nebius Group NV | 166.43 | 8.52 | 116.54 | 16.85% | $0.61 | $0.08 | 594.48% |
| Gen Digital Inc | 27.95 | 6.99 | 3.96 | 5.83% | $0.58 | $0.99 | 30.26% |
| Monday.Com Ltd | 246.99 | 8.12 | 9.03 | 0.14% | $-0.01 | $0.27 | 26.64% |
| UiPath Inc | 549.33 | 5.25 | 6.02 | 0.09% | $-0.02 | $0.3 | 14.38% |
| CommVault Systems Inc | 97.40 | 21.25 | 7.49 | 6.81% | $0.03 | $0.23 | 25.51% |
| Dolby Laboratories Inc | 25.50 | 2.54 | 5 | 1.78% | $0.07 | $0.27 | 9.25% |
| Qualys Inc | 25.43 | 9.07 | 7.39 | 9.4% | $0.06 | $0.14 | 10.32% |
| BlackBerry Ltd | 111.75 | 3.64 | 4.96 | 1.83% | $0.02 | $0.1 | 2.69% |
| Average | 133.12 | 13.9 | 18.08 | 7.06% | $0.78 | $1.51 | 64.8% |
By thoroughly analyzing Microsoft, we can discern the following trends:
The Price to Earnings ratio of 37.65 is 0.28x lower than the industry average, indicating potential undervaluation for the stock.
Considering a Price to Book ratio of 11.11, which is well below the industry average by 0.8x, the stock may be undervalued based on its book value compared to its peers.
Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 13.61, which is 0.75x the industry average.
With a Return on Equity (ROE) of 8.19% that is 1.13% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
The company has higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $44.43 Billion, which is 56.96x above the industry average, indicating stronger profitability and robust cash flow generation.
The gross profit of $52.43 Billion is 34.72x above that of its industry, highlighting stronger profitability and higher earnings from its core operations.
The company's revenue growth of 18.1% is significantly below the industry average of 64.8%. This suggests a potential struggle in generating increased sales volume.
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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.
By considering the Debt-to-Equity ratio, Microsoft can be compared to its top 4 peers, leading to the following observations:
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 be a concern for long-term performance compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: MSFT
