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TIMELINESS
SAFETY
TECHNICAL
2
1
2
RECENT
PRICE
High:
Low:
Raised 12/25/15
30.2
24.0
28.3
23.8
30.3
21.5
37.5
26.6
19.7 RELATIVE
DIVD
Median: 14.0) P/E RATIO 1.14 YLD 2.7%
53.00 P/ERATIO 19.3(Trailing:
36.0
17.5
31.5
14.9
31.6
22.7
29.5
23.7
32.9
26.3
39.0
26.3
50.0
34.6
56.8
39.7
LEGENDS
14.0 x Cash Flow p sh
. . . . Relative Price Strength
2-for-1 split 2/03
Options: Yes
Shaded area indicates recession
Raised 5/26/06
Raised 1/29/16
2018-20 PROJECTIONS
VALUE
LINE
120
100
80
64
48
Annl Total
Price
Gain
Return
High
75 (+40%) 11%
Low
65 (+25%)
8%
Insider Decisions
to Buy
Options
to Sell
A
0
0
1
M
0
0
3
J
0
0
0
J
0
0
2
A S
0 0
0 14
0 0
O
0
0
4
N
0
0
0
32
24
20
16
12
D
0
6
0
Institutional Decisions
1Q2015
2Q2015
3Q2015
1003
813
975
to Buy
to Sell
1019
1102
929
Hlds(000)583831757889845769550
Percent
shares
traded
21
14
7
1 yr.
3 yr.
5 yr.
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1.93
.84
.70
-.06
2.69
10218
49.8
2.84
--
2.25
.99
.85
-.09
4.05
10218
53.1
3.45
--
2.39
1.09
.90
-.10
4.48
10566
35.3
1.81
--
2.65
1.07
.94
-.07
4.87
10718
32.4
1.77
--
3.00
1.12
.97
.08
.08
5.69
10718
26.1
1.49
.3%
3.39
1.15
1.04
.16
.10
6.89
10862
25.8
1.36
.6%
2012
2013
2014
2015
2016
Fiscal
Year
Ends
2012
2013
2014
2015
2016
Calendar
2012
2013
2014
2015
2016
Full
Fiscal
Year
73723
77811
86833
93580
92000
Full
Fiscal
Year
2.72
2.65
2.63
2.65
2.75
Full
Year
.83
.97
1.18
1.29
THIS
STOCK
VL ARITH.*
INDEX
40.1
118.2
128.0
-10.4
20.6
40.9
18-20
3.72
1.27
1.16
.32
.08
4.49
10710
22.9
1.22
1.2%
4.40
5.45
6.60
6.56
7.21
8.35
8.80
1.34
1.65
2.16
1.92
2.47
3.09
3.12
1.20
1.42
1.87
1.62
2.10
2.69
2.72
.34
.40
.44
.52
.52
.64
.80
.16
.24
.35
.35
.23
.28
.28
3.99
3.32
3.97
4.44
5.33
6.82
7.92
10062 9380.0 9151.0 8908.0 8668.0 8376.0 8381.0
21.7
19.9
16.3
13.4
13.1
9.6
10.4
1.17
1.06
.98
.89
.83
.60
.66
1.3%
1.4%
1.4%
2.4%
1.9%
2.5%
2.8%
11.80
3.60
2.75
1.39
.75
9.75
7800
Revenues per sh A
Cash Flow per sh
Earnings per sh B
Divds Decld per sh E
Capl Spending per sh
Book Value per sh D
Common Shs Outstg C
Avg Annl P/E Ratio
Relative P/E Ratio
Avg Annl Divd Yield
15.30
4.85
3.85
1.95
.75
12.50
7200
18.0
1.12
2.8%
39788
44.0%
855.0
12715
32.0%
32.0%
31860
-48115
26.4%
26.4%
19.2%
27%
92000
37.5%
6100
22000
20.0%
23.9%
75000
40000
76000
19.5%
29.0%
14.5%
50%
Revenues ($mill) A
Operating Margin
Depreciation ($mill)
Net Profit ($mill)
Income Tax Rate
Net Profit Margin
Working Capl ($mill)
Long-Term Debt ($mill)
Shr. Equity ($mill) D
Return on Total Capl
Return on Shr. Equity
Retained to Com Eq
All Divds to Net Prof
110000
38.0%
6500
28250
20.0%
25.7%
85000
48000
90000
21.0%
31.5%
15.5%
50%
Microsoft
Corp.
is
making
its
presence known in the cloud arena.
The software giant continued benefiting
from the rapid adoption of cloud architecture and cloud computing in the December
period. On point, after a good showing in
this regard in the September quarter, the
companys efforts were once again
rewarded, as customers continued taking
active interest in its cloud offerings, with
the uptake spanning SaaS, PaaS, IaaS,
and hybrid cloud at scale, that, in turn,
was reflected in the continued success of
the Azure platform, Office 365, and the
Dynamics enterprise applications. The
strength of customer interest is such that
Microsoft will need to keep investing in
cloud infrastructure (a good thing). We expect that the companys efforts in the
cloud arena should breed success for the
foreseeable future.
Meanwhile, Microsofts latest financial results showed that it also had a
good holiday season. Sales of Xbox and
Surface Pro advanced nicely, and its
games business produced a strong performance, as well. Moreover, Windows 10
continued to show tremendous promise,
not only benefiting from the holiday season, but from a general interest in the new
operating system. The companys strategy
of building and fortifying an ecosystem
around Windows 10 seems to be having
the desired effect, as Microsoft brings
more value and innovation, services, and
new devices into the realm. Separately, we
note that Bing search once again picked
up market share, rising to 21%, and continues to make money, as earlier promised
by the executive management team.
We have made some adjustments to
our estimates for fiscal 2016. (Years
end June 30th.) The strength of the U.S.
dollar will likely limit reported revenue
growth in the second half, though probably
less in the June quarter; challenging business conditions in Brazil, China, and Russia may also be factor in this regard. That
said, we now estimate revenue and earnings of $92 billion and $2.75 a share for
fiscal 2016. Finally, our sense is new commitments to timely MSFT shares should
be made carefully, given the recent market
support. Those already holding the stock
would likely do well to continue doing so.
Charles Clark
February 12, 2016
2016 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.
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