Competitor Analysis: Evaluating Microsoft And Competitors In Software Industry

In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Microsoft (NASDAQ:MSFT) against its key competitors in the Software industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.

Microsoft Background

After examining Microsoft, the following trends can be inferred:

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In terms of the Debt-to-Equity ratio, Microsoft can be assessed by comparing it to its top 4 peers, resulting in the following observations:

Microsoft exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.21.
This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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Microsoft Background

Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).

Company	P/E	P/B	P/S	ROE	EBITDA (in billions)	Gross Profit (in billions)	Revenue Growth
Microsoft Corp	33.23	10.13	11.77	8.17%	$36.79	$47.83	12.27%
Oracle Corp	41.05	34.16	8.69	25.66%	$5.75	$9.97	8.64%
ServiceNow Inc	147.68	21.71	19.17	4.06%	$0.62	$2.33	21.34%
Palo Alto Networks Inc	47.57	20.36	15.72	6.33%	$0.45	$1.58	13.88%
CrowdStrike Holdings Inc	799.06	32.83	27.24	-0.57%	$0.05	$0.76	28.52%
Fortinet Inc	51.65	86.75	13.88	90.26%	$0.66	$1.24	13.0%
Gen Digital Inc	26.51	7.75	4.35	7.48%	$0.45	$0.79	4.01%
Monday.Com Ltd	591.12	13.05	14.41	-1.28%	$-0.02	$0.23	32.67%
Dolby Laboratories Inc	31.24	3.24	6.24	2.72%	$0.11	$0.32	13.13%
CommVault Systems Inc	44.02	25.57	8.01	3.9%	$0.02	$0.21	21.13%
QXO Inc	24.89	1.28	22.68	-0.21%	$-0.03	$0.01	-2.0%
Qualys Inc	31.66	11.67	9.08	10.53%	$0.05	$0.13	8.36%
Teradata Corp	37.55	24.44	1.76	32.0%	$0.08	$0.27	0.46%
SolarWinds Corp	68.14	1.87	3.27	0.94%	$0.07	$0.18	5.5%
Progress Software Corp	37.23	5.67	3.38	0.27%	$0.05	$0.18	21.47%
Average	141.38	20.74	11.28	13.01%	$0.59	$1.3	13.58%

After examining Microsoft, the following trends can be inferred:

A Price to Earnings ratio of 33.23 significantly below the industry average by 0.24x suggests undervaluation. This can make the stock appealing for those seeking growth.
Considering a Price to Book ratio of 10.13, which is well below the industry average by 0.49x, the stock may be undervalued based on its book value compared to its peers.
With a relatively high Price to Sales ratio of 11.77, which is 1.04x the industry average, the stock might be considered overvalued based on sales performance.
With a Return on Equity (ROE) of 8.17% that is 4.84% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
The company exhibits higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $36.79 Billion, which is 62.36x above the industry average, implying stronger profitability and robust cash flow generation.
The company has higher gross profit of $47.83 Billion, which indicates 36.79x above the industry average, indicating stronger profitability and higher earnings from its core operations.
The company is witnessing a substantial decline in revenue growth, with a rate of 12.27% compared to the industry average of 13.58%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

In terms of the Debt-to-Equity ratio, Microsoft can be assessed by comparing it to its top 4 peers, resulting in the following observations:

Microsoft exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.21.
This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

For Microsoft in the Software industry, the PE and PB ratios suggest that the stock is undervalued compared to its peers. However, the high PS ratio indicates that the stock may be overvalued based on revenue. In terms of ROE, EBITDA, and gross profit, Microsoft shows strong performance compared to its peers, indicating efficient operations and profitability. The low revenue growth suggests that Microsoft may be facing challenges in expanding its top line compared to industry peers.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

MSFTMicrosoft Corp

$428.77-0.35%

Overview

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Microsoft Background

Debt To Equity Ratio

Key Takeaways