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In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating Microsoft (NASDAQ:MSFT) in relation to its major competitors in the Software industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate company's performance in 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 | 37.64 | 11.11 | 13.60 | 8.19% | $44.43 | $52.43 | 18.1% |
| Oracle Corp | 70.28 | 35.83 | 14.82 | 13.12% | $6.12 | $10.04 | 12.17% |
| ServiceNow Inc | 113.59 | 17.14 | 15.67 | 3.65% | $0.65 | $2.49 | 22.38% |
| Palo Alto Networks Inc | 129.19 | 17.88 | 15.90 | 3.37% | $0.68 | $1.86 | 15.84% |
| Fortinet Inc | 33.30 | 31.08 | 10.21 | 21.88% | $0.56 | $1.32 | 13.64% |
| Nebius Group NV | 163.42 | 8.37 | 114.43 | 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% |
| Monday.Com Ltd | 238.21 | 7.83 | 8.71 | 0.14% | $-0.01 | $0.27 | 26.64% |
| UiPath Inc | 556.33 | 5.32 | 6.09 | 0.09% | $-0.02 | $0.3 | 14.38% |
| CommVault Systems Inc | 96.14 | 20.98 | 7.40 | 6.81% | $0.03 | $0.23 | 25.51% |
| Dolby Laboratories Inc | 25.39 | 2.53 | 4.98 | 1.78% | $0.07 | $0.27 | 9.25% |
| Qualys Inc | 25.44 | 9.07 | 7.39 | 9.4% | $0.06 | $0.14 | 10.32% |
| BlackBerry Ltd | 113 | 3.68 | 5.02 | 1.83% | $0.02 | $0.1 | 2.69% |
| Average | 132.71 | 13.9 | 17.88 | 7.06% | $0.78 | $1.51 | 64.8% |
Through an analysis of Microsoft, we can infer the following trends:
At 37.64, the stock's Price to Earnings ratio is 0.28x less than the industry average, suggesting favorable growth potential.
The current Price to Book ratio of 11.11, which is 0.8x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 13.6, which is 0.76x the industry average.
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 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.
Compared to its industry, 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'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 indicates the proportion of debt and equity used by a company to finance its assets and operations.
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 assessing Microsoft against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
When considering the debt-to-equity ratio, Microsoft exhibits a stronger financial position compared to its top 4 peers.
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.18, which can be perceived as a positive aspect by investors.
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
