Microsoft Corporation

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker Analyst Analyst Email
Stifel Nicolaus Brad R. Reback rebackb@stifel.com
Pacific Crest Securities-KBCM Brendan Barnicle bbarnicle@pacific-crest.com
Atlantic Equities Christopher Hickey c.hickey@atlantic-equities.com
BGC Financial, L.P. Colin W. Gillis cgillis@bgcpartners.com
Nomura Research Frederick Grieb frederick.grieb@nomura.com
Cowen & Company Gregg Moskowitz gregg.moskowitz@cowen.com
Griffin Securities Jay Vleeschhouwer jvleeschhouwer@griffinsecurities.com
Jefferies John DiFucci jdifucci@jefferies.com
Deutsche Bank Research Karl Keirstead karl.keirstead@db.com
Daiwa Securities Co. Ltd. Kazuya Nishimura kazuya.nishimura@us.daiwacm.com
BMO Capital Markets Keith Bachman keith.bachman@bmo.com
Evercore ISI Kirk Materne kirk.materne@evercoreisi.com
Bernstein Research Mark L. Moerdler mark.moerdler@bernstein.com
Raymond James Michael Turits michael.turits@raymondjames.com
Credit Suisse Philip Winslow philip.winslow@credit-suisse.com
Wunderlich Securities Rob Breza robbreza@wundernet.com
RBC Capital Markets Ross MacMillan ross.macMillan@rbccm.com
Cross Research Shannon Cross shannon@crossresearch.com
FBN Securities Shebly Seyrafi sseyrafi@fbnsecurities.com
Hilliard Lyons Stephen Turner sturner@hilliard.com
Oppenheimer Timothy Horan tim.horan@opco.com

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Primary Input Data

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Derived Input Data

Derived Input

Label

2015 Value

2016
Value

Equational Form

Net Operating Profit Less Adjusted Taxes NOPLAT  17,917 13,411 NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)
Free Cash Flow FCF 24,026 27,861 FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS
Tax Shield TS 284  270 TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income
Invested Capital IC 130,240 153,823 IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital
Return on Invested Capital ROIC 13.76%  8.72% ROIC\,=\,\frac { NOPLAT }{ IC }
Net Investment NetInv 8,764  31,182 NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation
Investment Rate IR 48.92% 232.50% IR\,=\,\frac {NetInv}{NOPLAT}
Weighted Average Cost of Capital
WACCMarket  18.74% 18.13% WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)
 WACCBook   9.92%  9.27%
Enterprise value
EVMarket  383,969 415,379 EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash
 EVBook   357,577  416,867
Long-Run Growth
g = IR x ROIC
  6.73%  20.27% Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
g = % \Delta GDP   2.50%   2.50%
Margin from Operations M  29.65%  24.20% M\,\,=\,\,\frac{EBIT}{SALES}
Depreciation/Amortization Rate D  17.77%  26.92% D\,\,=\,\,\frac{D+A}{EBITDA}

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

20.86%20.86%

Equational Form

Observed Value

Single-stage

multiple g solution

Two-stage valuation

model g solution

12/31/2015 12/31/2016 12/31/2015 12/31/2016 12/31/2015 12/31/2016

EV/SALES 

\frac {EV}{Sales} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)

4.13 4.87 21.30% 23.67% 20.59% 20.86%

EV/EBITDA

\frac {EV}{EBITDA} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)

11.45 14.71 21.30% 23.67% 20.59% 20.86%

EV/NOPLAT

\frac {EV}{NOPLAT} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}

21.43 30.97 21.30% 23.67% 20.59% 20.86%

EV/FCFOPS

\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)

15.98 14.91 21.30% 23.67% 20.59% 20.86%

EV/EBIT

\frac {EV}{EBIT} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)

13.93 20.13 21.30% 23.67% 20.59% 20.86%

EV/IC

\frac {EV}{IC} \,= \,\frac{ROIC\,  -\,  g}{WACC\,-\,g}

2.95 2.70 21.30% 23.67% 20.59% 20.86%

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