Post #14 by WEBspired on the Microsoft board

Stocks A to Z / Stocks M / Microsoft (MSFT)

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Microsoft is now trading above $400 / share, which puts it at the very upper end of its previous valuation range. They are going to report earnings next week so these numbers could change, but using $2.75 / share (+18% YoY) as an estimate we would get

TTM EPS     : $10.88
Share Price : $403.00
PE x        : 37x

from my data it last traded at this level at the end of 2021-Q3(CY) when it was at $322 / share (TTM EPS was $8.50). Earnings growth after this period was decent ($8.50->$8.95->$9.14->$9.20->$9.28) but the stock traded down to $2.38 per share; so not great news for shareholders.

tecmo
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Thanks tecmo. Are you trimming or taking any action? The momentum and love for MSFT, esp. given its AI leadership, are SO strong now that it’s hard to trim despite many folks thinking it’s multiple could be extended. Momentum has been great over the last year, so I find it hard to get off the train at this speed. Imagine they will do pretty well over the next decade given their excellent moat, management, people and vision. Hope we look back and see the ATVI acquisition as a very wise decision.

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Thanks tecmo. Are you trimming or taking any action?

No action (yet); but it is tempting to lighten up a bit.

Imagine they will do pretty well over the next decade given their excellent moat, management, people and vision

Confidence in the business is high, but that doesn't mean the stock will provide market beating returns from current valuation levels...

tecmo
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