Thursday, November 4, 2010

Microsoft an Underpriced Tech Stock (Video, Charts) *Comparison with Apple & Google* AAPL GOOG MSFT

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Microsoft reported earnings on October 28

Microsoft an Underpriced Tech Stock

Microsoft reported strong earnings and margins for calendar Q3 2010, which are reviewed at the Microsoft Financial Performance page, yet the PE (ttm) is only 12.1 at a $28.00 stock price. By comparison,
* Apple (AAPL) trades at a PE (ttm) of 20.8 at a $315.00 stock price
* Google (GOOG) trades at a PE (ttm) of 25.4 at a $625.00 stock price

Microsoft's gross and net margins for calendar Q3 2010 were 80.6% and 33.4%, on total revenues of $16.2B and a net income of $5.4B. By comparison,
* Apple (AAPL) gross margin 36.9%, net margin 21.2%, total revenues $20.3B, net income $4.3B
* Google (GOOG) gross margin 65.0%, net margin 29.7%, total revenues $7.3B, net income $2.2B

Microsoft is a financial outperformer with incredible margins, yet the PE does not indicate such. Based on the PE (ttm), investor expectations are higher for Apple and Google earnings per share growth. AAPL and GOOG are popular stocks currently.

Microsoft is old news, yet continues as a cash flow machine that has accumulated over $44B in cash, cash equivalents, and marketable securities. Current assets are $59.6B with total assets of $91.5B. By comparison,
* Apple (AAPL) has over $25B liquid assets, current assets $41.7B, total assets $75.2B
* Google (GOOG) has over $33B liquid assets, current assets $39.4B, total assets 53.3B

The latest Microsoft financial data and related commentary have been updated on the Microsoft Financial Performance page for the September Q3 2010 financial results reported by Microsoft. The charts are:
Microsoft Financial Performance by the Quarters
Earnings per Share and Cash Flow per Share
Total Revenues, Operating Income, and Net Income
Gross, Operating, & Net Margins
Return on Assets

Thumps Up for Microsoft

(Barron's) Thumbs Up for Microsoft 11/2/2010: Why Microsoft is the cheapest stock in the tech universe. Clare McKeen reports for Barron's.

More Charts!

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Apple (AAPL) financial performance and stock charts
Google (GOOG) financial performance and stock charts
Microsoft (MSFT) financial performance charts
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Goldman Sachs (GS) financial performance charts
Wells Fargo (WFC) financial performance charts
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Morgan Stanley (MS) financial performance charts
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