Microsoft (MSFT) Stock Analysis

Microsoft Dividend

Microsoft has paid a dividend every year since 2003 including 23 consecutive years of increases (Dividend Contender).

Current Dividend Annualized: $3.32

Microsoft (MSFT) Intrinsic Value – Margin of Safety Analysis            

(updated February 2025)

Normalized Diluted Earnings Per Share (TTM): $12.41
Free Cash Flow (TTM): $9.37
Cash Flow From Operations (CFO) Per Share (TTM): $16.81

Estimated Intrinsic Value: $345

Target Buy Price Based on Required Margin of Safety =  $345
(Required Margin of Safety Based On Risk Stability Grade:

A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)

Target SELL Price Based on Estimated Intrinsic Value = $482
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)

Risk / Stability Grade: A

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

Financial Risk Grade: A+

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

Business Quality Grade: A 

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report: 12/31/25 

AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA)- None
Global Conservative Income (GCI) – None
Global High Income (GHI) – None

Company Description

Sector: Technology
Industry: Software – Infrastructure

Company Overview:
Microsoft (MSFT) is a global technology leader specializing in software, cloud computing, artificial intelligence, and enterprise solutions. Best known for its Windows operating system and Office productivity suite, Microsoft has successfully expanded into cloud computing with Azure, gaming through Xbox, and AI-powered tools like Copilot. The company serves businesses and consumers worldwide, driving innovation across multiple industries.

Company Strengths:
Microsoft benefits from a highly diversified business model, with strong recurring revenue from cloud services (Azure), enterprise software (Office 365), and gaming. Its dominance in enterprise IT, coupled with investments in AI and cybersecurity, positions it as a key player in the digital transformation era. The company maintains a strong balance sheet, consistent revenue growth, and a shareholder-friendly approach with dividends and buybacks.

Company Challenges:
Microsoft faces intense competition in cloud computing from Amazon (AWS) and Google Cloud, requiring continuous innovation and investment. Regulatory scrutiny over acquisitions, data privacy, and antitrust concerns could pose risks to its expansion strategy. Additionally, the rapid evolution of AI and software demands sustained R&D efforts to stay ahead of emerging competitors in both enterprise and consumer markets.

Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.