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In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Microsoft (NASDAQ:MSFT) against its key competitors in the Software industry. By analyzing important 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 | 67.43 | 34.38 | 14.22 | 13.12% | $6.12 | $10.04 | 12.17% |
| ServiceNow Inc | 113.66 | 17.15 | 15.68 | 3.65% | $0.65 | $2.49 | 22.38% |
| Palo Alto Networks Inc | 129.93 | 17.98 | 15.99 | 3.37% | $0.68 | $1.86 | 15.84% |
| Fortinet Inc | 33.24 | 31.03 | 10.19 | 21.88% | $0.56 | $1.32 | 13.64% |
| Nebius Group NV | 147.32 | 7.55 | 103.16 | 16.85% | $0.61 | $0.08 | 594.48% |
| Gen Digital Inc | 27.62 | 6.91 | 3.91 | 5.83% | $0.58 | $0.99 | 30.26% |
| Monday.Com Ltd | 238.92 | 7.85 | 8.74 | 0.14% | $-0.01 | $0.27 | 26.64% |
| UiPath Inc | 514.67 | 4.92 | 5.64 | 0.09% | $-0.02 | $0.3 | 14.38% |
| CommVault Systems Inc | 96.03 | 20.95 | 7.39 | 6.81% | $0.03 | $0.23 | 25.51% |
| Dolby Laboratories Inc | 25.37 | 2.53 | 4.97 | 1.78% | $0.07 | $0.27 | 9.25% |
| Qualys Inc | 25.22 | 8.99 | 7.33 | 9.4% | $0.06 | $0.14 | 10.32% |
| BlackBerry Ltd | 112.25 | 3.66 | 4.98 | 1.83% | $0.02 | $0.1 | 2.69% |
| Average | 127.64 | 13.66 | 16.85 | 7.06% | $0.78 | $1.51 | 64.8% |
By closely examining Microsoft, we can identify the following trends:
With a Price to Earnings ratio of 37.65, which is 0.29x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
The current Price to Book ratio of 11.11, which is 0.81x 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 13.61, which is 0.81x the industry average.
The Return on Equity (ROE) of 8.19% is 1.13% above the industry average, highlighting efficient use of equity to generate profits.
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 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 assesses the extent to which a company relies on borrowed funds compared 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.
When evaluating Microsoft alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
When comparing the debt-to-equity ratio, Microsoft is in a stronger financial position compared to its top 4 peers.
The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.18.
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
