Microsoft Excel LibreOffice Calc

Microsoft Corp. (MSFT)

Price to FCFE (P/FCFE)

Difficulty: Intermediate

Free Cash Flow to Equity (FCFE)

Microsoft Corp., FCFE calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013
Net income 16,571  21,204  16,798  12,193  22,074  21,863 
Net noncash charges 6,846  16,651  18,603  15,962  9,804  8,554 
Changes in operating assets and liabilities 20,467  1,652  (2,076) 1,513  624  (1,375)
Net cash from operations 43,884  39,507  33,325  29,668  32,502  29,042 
Proceeds from issuance (repayments) of short-term debt, maturities of 90 days or less, net (7,324) (4,963) 7,195  4,481  500  –
Proceeds from issuance of debt 7,183  44,344  13,884  10,680  10,350  4,883 
Repayments of debt (10,060) (7,922) (2,796) (1,500) (3,888) (1,346)
Additions to property and equipment (11,632) (8,129) (8,343) (5,944) (5,485) (4,257)
Free cash flow to equity (FCFE) 22,051  62,837  43,265  37,385  33,979  28,322 
Item Description The company
FCFE Free cash flow to equity is the cash flow available to Microsoft Corp.'s equity holders after all operating expenses, interest, and principal payments have been paid and necessary investments in working and fixed capital have been made. Microsoft Corp.'s FCFE increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Price to FCFE Ratio, Current

Microsoft Corp., current P/FCFE calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
No. shares of common stock outstanding 7,668,217,316
Selected Financial Data (USD $)
Free cash flow to equity (FCFE) (in millions) 22,051 
FCFE per share 2.88
Current share price (P) 107.58
Ratio
P/FCFE 37.41
Benchmarks
P/FCFE, Competitors
Adobe Systems Inc. 44.02
Alphabet Inc. 34.93
Facebook Inc. 28.70
International Business Machines Corp. 7.91
Oracle Corp. 11.82
salesforce.com inc. 59.97
P/FCFE, Sector
Software & Computer Services 17.88
P/FCFE, Industry
Technology 15.68

If company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.

Otherwise, if company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Price to FCFE Ratio, Historical

Microsoft Corp., historical P/FCFE calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013
No. shares of common stock outstanding1 7,668,217,316 7,702,243,979 7,792,515,573 7,997,980,969 8,239,848,789 8,329,956,402
Selected Financial Data (USD $)
Free cash flow to equity (FCFE) (in millions)2 22,051  62,837  43,265  37,385  33,979  28,322 
FCFE per share4 2.88 8.16 5.55 4.67 4.12 3.40
Share price1, 3 108.04 72.26 56.21 46.70 43.16 31.85
Ratio
P/FCFE5 37.57 8.86 10.12 9.99 10.47 9.37
Benchmarks
P/FCFE, Competitors
Adobe Systems Inc. – 35.59 27.41 25.83 31.68 30.61
Alphabet Inc. – 31.41 22.41 29.23 31.52 37.12
Facebook Inc. – 32.08 33.48 52.13 64.54 164.64
International Business Machines Corp. – 8.55 10.60 9.60 10.95 9.23
Oracle Corp. 10.78 8.16 11.68 5.69 8.98 8.95
salesforce.com inc. 52.51 25.44 50.00 164.03 21.68 51.38
P/FCFE, Sector
Software & Computer Services – 15.66 16.08 14.59 15.61 15.57
P/FCFE, Industry
Technology – 13.52 12.81 9.94 12.44 12.44

1 Data adjusted for splits and stock dividends.

2 See Details »

3 Close price on the filing date of Microsoft Corp.'s Annual Report.

2018 Calculations

4 FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 22,051,000,000 ÷ 7,668,217,316 = 2.88

5 P/FCFE = Share price ÷ FCFE per share
= 108.04 ÷ 2.88 = 37.57

Ratio Description The company
P/FCFE Price to free cash flow to equity is cash valuation indicator of stockholders' equity. Microsoft Corp.'s P/FCFE ratio declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.