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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 | 38.52 | 11.09 | 13.76 | 8.19% | $44.43 | $52.43 | 18.1% |
| Oracle Corp | 63.73 | 32.49 | 13.44 | 13.12% | $6.12 | $10.04 | 12.17% |
| ServiceNow Inc | 110.24 | 16.74 | 15.05 | 3.65% | $0.65 | $2.49 | 22.38% |
| Palo Alto Networks Inc | 135.72 | 18.79 | 16.70 | 3.37% | $0.68 | $1.86 | 15.84% |
| Fortinet Inc | 33.55 | 31.32 | 10.29 | 21.88% | $0.56 | $1.32 | 13.64% |
| Nebius Group NV | 162.47 | 8.32 | 113.77 | 16.85% | $0.61 | $0.08 | 594.48% |
| Gen Digital Inc | 26.94 | 6.73 | 3.81 | 5.83% | $0.58 | $0.99 | 30.26% |
| Monday.Com Ltd | 257.67 | 8.47 | 9.42 | 0.14% | $-0.01 | $0.27 | 26.64% |
| UiPath Inc | 540.33 | 5.17 | 5.92 | 0.09% | $-0.02 | $0.3 | 14.38% |
| Dolby Laboratories Inc | 23.97 | 2.39 | 4.70 | 1.78% | $0.07 | $0.27 | 9.25% |
| CommVault Systems Inc | 79.64 | 29.61 | 5.79 | 5.12% | $0.03 | $0.23 | -2.05% |
| Qualys Inc | 24.41 | 8.71 | 7.10 | 9.4% | $0.06 | $0.14 | 10.32% |
| BlackBerry Ltd | 120.75 | 3.93 | 5.36 | 1.83% | $0.02 | $0.1 | 2.69% |
| Average | 131.62 | 14.39 | 17.61 | 6.92% | $0.78 | $1.51 | 62.5% |
By analyzing Microsoft, we can infer the following trends:
The stock's Price to Earnings ratio of 38.52 is lower than the industry average by 0.29x, suggesting potential value in the eyes of market participants.
The current Price to Book ratio of 11.09, which is 0.77x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
With a relatively low Price to Sales ratio of 13.76, which is 0.78x the industry average, the stock might be considered undervalued based on sales performance.
With a Return on Equity (ROE) of 8.19% that is 1.27% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $44.43 Billion, which is 56.96x above the industry average, the company demonstrates 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 lower compared to the industry average of 62.5%. This indicates a potential fall in the company's sales performance.
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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 analyzing Microsoft in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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 be a concern compared to industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
Posted In: MSFT
