Microsoft Corporation (MSFT) Fundamental Checkup
Microsoft Corporation fundamental checkup using revenue growth, EPS growth, free cash flow, margins, ROIC, debt-to-equity, and TGMCharts chart exhibits as of July 30, 2026.
By TGMCharts Research · Data as of · Updated
Microsoft Corporation displays positive operational momentum with five-year revenue growth of 14.57% and five-year EPS expansion of 17.26%, though free-cash-flow growth of 3.60% presents a clear divergence to monitor.
The checkup weighs operating growth, shareholder conversion, cash conversion, reinvestment quality, and balance-sheet flexibility. Current ratio is 1.23x and debt-to-equity is 0.13x, so the balance-sheet read is part of the final view rather than a footnote.
- Microsoft Corporation has market cap of $3.45T and closed at $465 on July 30, 2026.
- Five-year revenue CAGR is 14.57% and five-year EPS CAGR is 17.26%.
- Five-year free-cash-flow CAGR is 3.60%.
- Net margin is 40.31% and ROIC is 20.56%.
- Current ratio is 1.23x and debt-to-equity is 0.13x.
Fundamental snapshot
The valuation, growth, profitability, and balance-sheet facts behind the checkup.
Operational Momentum Evaluated Against Market Pricing
Analyzing Microsoft Corporation requires a systematic look at how top-line expansion, bottom-line conversion, cash flow generation, capital efficiency, and balance sheet health align. The equity closed at $465 on July 30, 2026. This market price must be evaluated against the underlying financial records rather than short-term market sentiment.
The core analysis relies on contrasting the five-year revenue CAGR of 14.57% and five-year EPS CAGR of 17.26% against the five-year free-cash-flow CAGR of 3.60%. When cash generation trails GAAP earnings growth, a thorough fundamental review must investigate the underlying operational reasons for this gap.
Current compounder snapshot · MSFT
Live supporting context; not part of the article's frozen 2026-07-30 evidence snapshot.
- Score
- 28/100
- 10Y CAGR
- 13.8%
- Median YoY
- 14.3%
- YoY volatility
- σ 4.4pp· very smooth
- Quarters ≥ 20%
- 4 of 40
- Negative quarters
- 0
- Valuation vs own 10Y history
- P/S 10.4x · 10Y median 10.5x · 49th percentile · as of Jul 31, 2026
How this score is computed
- Quarters at or above 20%: 4 of 40 → 4 of 40 pts
- Steadiness (typical swing 4.4pp) → 21.9 of 25 pts
- Pace (median 14.3% YoY) → 0 of 20 pts
- Latest quarter (17.7% YoY) → 2 of 15 pts
- Score: 28 of 100
Annual revenue · last 11 fiscal years
Quarterly YoY revenue growth vs the 20% line
P/S multiple vs its 10Y median
Operating Profile and Technology Sector Context
As an established constituent within the Technology sector, the business exhibits a distinct mix of massive scale and ongoing capital deployment. This snapshot integrates the company's capital structure and growth metrics to provide a comprehensive view of its financial position before examining individual financial statements.
Fundamental evidence table
A compact cross-check of valuation, growth, quality, and financial flexibility.
MSFT revenue
Revenue history shows whether the business has been expanding before margins and per-share metrics are considered.
Five-year revenue CAGR: 14.57%. This is endpoint-to-endpoint from the fiscal years shown — a depressed start year can inflate it, so read it against the recent bars.
Five-year revenue CAGR of 14.57% is the top-line test. A fundamental checkup becomes more durable when revenue growth is paired with earnings growth instead of depending only on margin expansion.
Top Line Expansion Translating into Per Share Earnings
The relationship between revenue growth and net income expansion reveals the efficiency of the operating model. The five-year revenue CAGR stands at 14.57%, indicating steady demand. Meanwhile, the five-year EPS CAGR of 17.26% indicates that profitability has grown faster than sales, suggesting operational leverage.
MSFT EPS
EPS history shows how much of the business growth has reached shareholders.
Five-year EPS CAGR: 17.26%. This is endpoint-to-endpoint from the fiscal years shown — a depressed or negative start year can inflate it, so read it against the recent bars.
Five-year EPS CAGR of 17.26% is the shareholder conversion check. If EPS grows faster than revenue, the note should ask whether that came from margin quality, buybacks, or a temporary base effect.
Cash Generation Divergence from Net Income Trends
While earnings metrics show strong upward momentum, cash flow trends present a different picture. The five-year free-cash-flow CAGR of 3.60% is lower than the EPS growth rate, indicating that accounting profits are not fully translating into immediate liquidity. This divergence suggests that capital expenditures or working capital requirements are consuming a larger share of operating cash flow.
MSFT free cash flow
Free cash flow checks whether earnings are converting into owner cash.
Five-year free-cash-flow CAGR: 3.60%. This is endpoint-to-endpoint from the fiscal years shown — a depressed or negative start year can inflate it, so read it against the recent bars.
Free-cash-flow CAGR of 3.60% is the counterweight to the EPS story. If cash flow lags earnings, the quality of the fundamental setup deserves a more cautious reading.
Capital Efficiency and Profitability Metrics
The sustainability of the company's expansion depends on its profit margins and return on capital. The net margin of 40.31% demonstrates high profitability per dollar of revenue. Furthermore, the return on invested capital (ROIC) of 20.56% indicates that the company generates solid returns on its deployed capital, supporting its reinvestment strategy.
MSFT net margin
Net margin is the operating-quality check behind the growth record.
Net margin (TTM): 40.31%. The bars below are annual fiscal years.
Net margin of 40.31% shows how much revenue becomes profit. The checkup is stronger when margin quality supports EPS growth rather than simply flattering one recent period.
MSFT ROIC Chart
ROIC tests whether the business earns enough on reinvested capital to deserve attention.
Latest ROIC: 20.56%.
ROIC of 20.56% is the reinvestment-quality check. A business with stronger returns can support a better long-term read even when the valuation is not obviously cheap.
Liquidity Position and Capital Structure Guardrails
A company's balance sheet provides the necessary cushion to support long-term growth initiatives. The current ratio of 1.23x indicates a stable short-term liquidity profile. This is supported by a conservative capital structure, as shown by the debt-to-equity ratio of 0.13x, which limits financial risk even during periods of heavy capital investment.
MSFT debt-to-equity Chart
Debt-to-equity keeps the checkup honest about balance-sheet flexibility.
Latest debt-to-equity ratio: 0.13x.
Debt-to-equity of 0.13x and current ratio of 1.23x are the balance-sheet checks. They matter because growth and margins are less valuable if financial flexibility is narrowing.
Market Multiples and Implied Growth Expectations
The market currently prices the business at a trailing P/E ratio of 25.13x, which corresponds to an earnings yield of 3.98%. These valuation metrics indicate that the market expects continued high-quality growth and capital efficiency, leaving little room for operational execution errors.
MSFT Price Chart
Latest close: $465 as of July 30, 2026.
The close at $465 is not the conclusion, but it is the market reference point. The fundamental read has to explain whether growth, margins, and balance-sheet support justify the price investors are paying.
Asymmetric Risks and Potential Operational Friction Points
The positive outlook is supported by strong revenue and EPS growth, high net margins, and a solid balance sheet. However, the primary risk is the slower growth of free cash flow relative to net income. If capital expenditure requirements remain high, the gap between GAAP earnings and actual cash generation could weigh on future capital allocation flexibility.
Bull and bear case
Fundamental support
- Five-year revenue CAGR of 14.57% and five-year EPS CAGR of 17.26% support the business case.
- Net margin of 40.31% and ROIC of 20.56% are the quality checks behind the thesis.
Fundamental pressure
- Free-cash-flow CAGR of 3.60% can weaken the read if it falls away from EPS growth.
- Debt-to-equity of 0.13x and current ratio of 1.23x are the balance-sheet checks that can change the view.
Systematic Review of Ongoing Financial Performance
A change in the fundamental outlook would require a shift in the relationship between earnings growth and cash conversion. If future financial reports show that free-cash-flow growth remains below the EPS growth rate, or if the debt-to-equity ratio rises significantly, the current valuation multiples may face pressure. This analysis is based on historical data and does not constitute personalized financial advice.
FAQ
What is the fundamental read on MSFT?
Microsoft Corporation is judged through revenue growth of 14.57%, EPS growth of 17.26%, free-cash-flow growth of 3.60%, net margin of 40.31%, and ROIC of 20.56%.
Which MSFT fundamental metric matters most?
No single metric carries the article. The checkup requires growth, cash conversion, profitability quality, balance-sheet flexibility, and valuation to be read together.
When should this MSFT checkup refresh?
We refresh this note after each daily market close; its figures are as of July 30, 2026.
What would change our mind
- Revenue growth moving away from the current five-year CAGR of 14.57%.
- Free-cash-flow growth drifting away from five-year EPS CAGR of 17.26%.
- ROIC or balance-sheet flexibility weakening from ROIC of 20.56% and debt-to-equity of 0.13x.
The bottom line
Microsoft Corporation fundamental research note from TGMCharts Research, grounded in a dated fundamentals snapshot, chart exhibits, and linked source facts.
Read next: Microsoft Corporation (MSFT) Earnings ReviewEarnings review on Microsoft Corporation — from the same data-checked research desk.How we checked this researchShowHide
Data snapshot · By TGMCharts Research.
Every number in this note comes from data we compute and store ourselves from the company's reported figures, plus verbatim excerpts from its SEC filings. When a value isn't available we say so — we never fill gaps with estimates.
Latest filing excerpt
10-K · filed 2026-07-29 · period 2026-06-30 · SEC EDGAR source
- “Highlights from fiscal year 2026 compared with fiscal year 2025 included: Microsoft Cloud revenue increased 27% to $214.4 billion.”
- “Commercial remaining performance obligation increased 84% to $678 billion.”
- “Fiscal Year 2026 Compared with Fiscal Year 2025 Revenue increased $50.1 billion or 18% driven by growth in Microsoft Cloud.”
- “Cost of revenue increased $18.5 billion or 21% driven by growth in Microsoft Cloud.”
Source pages
Exhibit sources
Research trail
Every number, checked
Every numeric or dated claim in this note was checked against our stored company data before publishing — each figure below links to the page it comes from.