Microsoft Excel LibreOffice Calc

Common Stock Valuation Ratios (Price Multiples)

Difficulty: Beginner


Current Valuation Ratios

Microsoft Corp., current price multiples

Microsoft Excel LibreOffice Calc
Microsoft Corp. Adobe Inc. Alphabet Inc. Facebook Inc. International Business Machines Corp. Oracle Corp. salesforce.com inc. Software & Computer Services Technology
Selected Financial Data
Current share price (P) $ 110.97
No. shares of common stock outstanding 7,672,213,446
Growth rate (g) 9.75%
 
Earnings per share (EPS) $ 2.16
Next year expected EPS $ 2.37
Operating profit per share $ 4.57
Sales per share $ 14.38
Book value per share (BVPS) $ 10.78
Ratios (Price Multiples)
Price to earnings (P/E) 51.38 48.74 25.11 20.90 22.00 49.24 968.03 39.69 29.20
Price to next year expected earnings 46.81 43.57 22.13 18.09 15.94 42.12 1,003.67 34.98 25.39
Price-earnings-growth (PEG) 5.27 4.11 1.87 1.35 0.58 2.91 2.95 1.95
Price to operating profit (P/OP) 24.29 44.46 29.33 18.55 10.73 13.77 523.40 27.77 21.12
Price to sales (P/S) 7.71 13.98 5.64 8.27 1.60 4.73 11.78 7.08 5.19
Price to book value (P/BV) 10.29 13.49 4.35 5.49 7.19 4.12 13.14 6.85 6.00

Based on: 10-K (filing date: 2018-08-03).

If company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.

Otherwise, if company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.


Historical Valuation Ratios (Summary)

Microsoft Corp., historical price multiples

Microsoft Excel LibreOffice Calc
Jun 30, 2018 Jun 30, 2017 Jun 30, 2016 Jun 30, 2015 Jun 30, 2014 Jun 30, 2013
Price to earnings (P/E) 50.00 26.25 26.08 30.63 16.11 12.14
Price to operating profit (P/OP) 23.63 24.93 21.70 20.57 12.81 9.91
Price to sales (P/S) 7.51 6.19 5.13 3.99 4.10 3.41
Price to book value (P/BV) 10.02 7.69 6.08 4.66 3.96 3.36

Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Microsoft Corp.’s P/E ratio increased from 2016 to 2017 and from 2017 to 2018.
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Microsoft Corp.’s P/OP ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018.
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Microsoft Corp.’s P/S ratio increased from 2016 to 2017 and from 2017 to 2018.
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. Microsoft Corp.’s P/BV ratio increased from 2016 to 2017 and from 2017 to 2018.

Price to Earnings (P/E)

Microsoft Corp., historical P/E 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 $)
Net income (in millions) 16,571  21,204  16,798  12,193  22,074  21,863 
Earnings per share (EPS)3 2.16 2.75 2.16 1.52 2.68 2.62
Share price1, 2 108.04 72.26 56.21 46.70 43.16 31.85
Ratio
P/E ratio4 50.00 26.25 26.08 30.63 16.11 12.14
Benchmarks
P/E Ratio, Competitors
Adobe Inc. 46.11 57.41 46.80 70.59 132.73 104.21
Alphabet Inc. 25.92 59.34 28.45 29.71 24.87
Facebook Inc. 21.51 35.20 37.05 84.21 74.26
International Business Machines Corp. 25.07 14.29 9.65 13.55 11.58
Oracle Corp. 45.90 22.49 18.53 17.92 16.33 12.78
salesforce.com inc. 731.11 324.94
P/E Ratio, Sector
Software & Computer Services 35.63 26.43 28.01 21.60
P/E Ratio, Industry
Technology 27.19 20.90 18.72 18.58

Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Microsoft Corp.’s Annual Report.

2018 Calculations

3 EPS = Net income ÷ No. shares of common stock outstanding
= 16,571,000,000 ÷ 7,668,217,316 = 2.16

4 P/E ratio = Share price ÷ EPS
= 108.04 ÷ 2.16 = 50.00

Ratio Description The company
P/E ratio The P/E ratio tells analyst how much an investor in common stock pays per dollar of current earnings. Microsoft Corp.’s P/E ratio increased from 2016 to 2017 and from 2017 to 2018.

Price to Operating Profit (P/OP)

Microsoft Corp., historical P/OP 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 $)
Operating income (in millions) 35,058  22,326  20,182  18,161  27,759  26,764 
Operating profit per share3 4.57 2.90 2.59 2.27 3.37 3.21
Share price1, 2 108.04 72.26 56.21 46.70 43.16 31.85
Ratio
P/OP ratio4 23.63 24.93 21.70 20.57 12.81 9.91
Benchmarks
P/OP Ratio, Competitors
Adobe Inc. 42.06 44.86 36.62 49.21 86.32 71.49
Alphabet Inc. 30.27 28.74 23.37 24.29 21.78
Facebook Inc. 19.10 27.76 30.46 49.89 43.72
International Business Machines Corp. 12.22 12.94 8.11 8.79 9.74
Oracle Corp. 12.83 16.52 13.09 12.84 12.12 9.51
salesforce.com inc. 395.31 908.77 411.51
P/OP Ratio, Sector
Software & Computer Services 24.93 21.61 20.87 16.32
P/OP Ratio, Industry
Technology 19.67 16.53 14.33 14.28

Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Microsoft Corp.’s Annual Report.

2018 Calculations

3 Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= 35,058,000,000 ÷ 7,668,217,316 = 4.57

4 P/OP ratio = Share price ÷ Operating profit per share
= 108.04 ÷ 4.57 = 23.63

Ratio Description The company
P/OP ratio Because P/E ratio is calculated using net income, the ratio can be sensitive to nonrecurring earnings and capital structure, analysts may use price to operating profit. Microsoft Corp.’s P/OP ratio increased from 2016 to 2017 but then slightly declined from 2017 to 2018.

Price to Sales (P/S)

Microsoft Corp., historical P/S 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 $)
Revenue (in millions) 110,360  89,950  85,320  93,580  86,833  77,849 
Sales per share3 14.39 11.68 10.95 11.70 10.54 9.35
Share price1, 2 108.04 72.26 56.21 46.70 43.16 31.85
Ratio
P/S ratio4 7.51 6.19 5.13 3.99 4.10 3.41
Benchmarks
P/S Ratio, Competitors
Adobe Inc. 13.23 13.32 9.34 9.27 8.59 7.45
Alphabet Inc. 5.82 6.78 6.14 6.27 5.44
Facebook Inc. 8.52 13.80 13.70 17.32 17.51
International Business Machines Corp. 1.82 2.12 1.56 1.76 1.91
Oracle Corp. 4.41 5.56 4.45 4.66 4.67 3.75
salesforce.com inc. 8.89 6.96 7.09 7.82 9.54 8.92
P/S Ratio, Sector
Software & Computer Services 6.36 5.43 4.88 4.43
P/S Ratio, Industry
Technology 4.83 4.00 3.32 3.41

Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Microsoft Corp.’s Annual Report.

2018 Calculations

3 Sales per share = Revenue ÷ No. shares of common stock outstanding
= 110,360,000,000 ÷ 7,668,217,316 = 14.39

4 P/S ratio = Share price ÷ Sales per share
= 108.04 ÷ 14.39 = 7.51

Ratio Description The company
P/S ratio An rationale for the P/S ratio is that sales, as the top line in an income statement, are generally less subject to distortion or manipulation than other fundamentals such as EPS or book value. Sales are also more stable than earnings and never negative. Microsoft Corp.’s P/S ratio increased from 2016 to 2017 and from 2017 to 2018.

Price to Book Value (P/BV)

Microsoft Corp., historical P/BV 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 $)
Stockholders’ equity (in millions) 82,718  72,394  71,997  80,083  89,784  78,944 
Book value per share (BVPS)3 10.79 9.40 9.24 10.01 10.90 9.48
Share price1, 2 108.04 72.26 56.21 46.70 43.16 31.85
Ratio
P/BV ratio4 10.02 7.69 6.08 4.66 3.96 3.36
Benchmarks
P/BV Ratio, Competitors
Adobe Inc. 12.76 11.50 7.37 6.35 5.26 4.49
Alphabet Inc. 4.49 4.93 3.99 3.91 3.44
Facebook Inc. 5.65 7.54 6.39 7.02 6.05
International Business Machines Corp. 8.20 9.30 8.92 13.73 8.37
Oracle Corp. 3.84 3.90 3.49 3.66 3.82 3.13
salesforce.com inc. 9.93 7.78 9.45 10.57 12.79 11.74
P/BV Ratio, Sector
Software & Computer Services 6.15 5.19 4.85 4.51
P/BV Ratio, Industry
Technology 5.59 4.57 4.22 4.20

Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).

1 Data adjusted for splits and stock dividends.

2 Close price on the filing date of Microsoft Corp.’s Annual Report.

2018 Calculations

3 BVPS = Stockholders’ equity ÷ No. shares of common stock outstanding
= 82,718,000,000 ÷ 7,668,217,316 = 10.79

4 P/BV ratio = Share price ÷ BVPS
= 108.04 ÷ 10.79 = 10.02

Ratio Description The company
P/BV ratio The P/BV ratio is interpreted as an indicator of market judgment about the relationship between a company’s required rate of return and its actual rate of return. Microsoft Corp.’s P/BV ratio increased from 2016 to 2017 and from 2017 to 2018.