Is Microsoft a Value Stock?

Check out the plunge in Microsoft‘s ($MSFT) P/E Ratio:

Even though Microsoft’s earnings have risen steadily, the stock has basically ranged between $25 and $30 for the last eight years. Add the two phenomena together and you get a declining Price/Earnings Ratio.

So is the stock cheap? Maybe.

For the fiscal year ending in June 2012, Microsoft is expected to earn $2.75 per share. The stock is currently going for 9.24 times that.

Over those same four quarters, the S&P 500 is expected to earn $101.73. At the current price, the index is going for 11.17 times that. This means that Microsoft’s valuation is 17% less than the overall market’s.

Also, bear in mind that Microsoft recently raised its quarterly dividend to 20 cents per share. That 80-cent dividend for the year works out to a yield of 3.15%.

Posted by on November 30th, 2011 at 2:44 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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