Microsoft Corporation (MSFT)

FairStock Score: 75/100 — HIGH CONVICTION

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I see Microsoft as a high-quality stalwart: FairStock’s computed Lynch category is STALWART, with steady growth—profit 16.9% a year and revenue 14.6% a year over five years. The filed record supports that: in fiscal 2026, the year ended 2026-06-30, revenue was $331.8B, up about 17.8% from $281.7B in fiscal 2025, the year ended 2025-06-30; net income was $133.7B, up about 31.3% from $101.8B; and diluted EPS was $17.95 versus $13.64. That is a software-based business whose high returns and steady growth suggest a durable competitive advantage—the kind of moat that shows up in FairStock’s calculated ROE of 34.04% and ROCE of 14.09%, with debt/equity of only 0.29, and a FairStock-calculated Altman Z-score of 8.57. The balance sheet looks conservative. The trouble is price. At the 2026-10-16 close of $529.05, FairStock calculates a P/E of 29.44, P/B of 8.88, EV/EBITDA of 19.02, and a Graham Number of $155.18—a negative margin of safety of 247.62%. Free cash flow is $67.0B, and FairStock calculates a 1.7% FCF yield, so the market is paying dearly for future cash. A PEG of 0.96 and FairStock score of 75/100 soften that, and FairStock’s Piotroski score is 6/9, not perfect. I would call this a wonderful business at a demanding price: growth and returns are excellent, but the Graham-style asset and cash-flow yardsticks leave little room for disappointment. I want to watch whether earnings keep compounding enough to justify the multiple.

In plain English: Microsoft sells operating systems, business software, server tools, devices and video games to people and companies around the world. The business looks strong: sales and profits are large and growing, returns are high, and debt is modest. At the latest price, the shares look expensive on simple measures of what it earns and owns, though the growth makes the price less extreme than those measures alone suggest.

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Data as of 2026-10-16 close · note generated 2026-10-20 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q3 2026 10-Q (period ended 2026-03-31) · fiscal Q2 2026 10-Q (period ended 2025-12-31) · fiscal Q1 2026 10-Q (period ended 2025-09-30) · fiscal Q3 2025 10-Q (period ended 2025-03-31) · FY2026 10-K (period ended 2026-06-30) · FY2025 10-K (period ended 2025-06-30) · FY2024 10-K (period ended 2024-06-30)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer