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ZYBERNO

Stock Report

Updated Sep 1, 2026

MICROSOFT CORPORATION (MSFT)

Technology • NASDAQ

$507.29

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide.

Professional Investment Analysis

ZYBERNO SCORE →

Is it a great business? Is it getting better?

77.8/100

GREAT BUSINESS

MICROSOFT CORPORATION (MSFT) scores 78/100 — exceptional capital returns and consistent cash generation across all measurement periods.

📊 How is the Zyberno Score calculated? +

The Zyberno Score answers one question: "Is this a quality business worth owning?" It's a 0-100 investment grade that evaluates business fundamentals across four critical dimensions, based on principles from Warren Buffett, Benjamin Graham, Peter Lynch, and Charlie Munger.

The 4 Core Categories (25 points each):

1. PROFITABILITY (25 pts)

Metrics: ROE, ROIC, Net Margin, Operating Margin
Thresholds: ROE >20% excellent • ROIC >20% excellent • Net Margin >20% excellent • Operating Margin >25% excellent

2. FINANCIAL STRENGTH (25 pts)

Metrics: Debt-to-Equity, Current Ratio, Interest Coverage, Altman Z-Score
Thresholds: D/E <0.3 excellent • Current Ratio >2.5 excellent • Interest Coverage >10x excellent • Altman Z >3.0 safe

3. CASH FLOW QUALITY (25 pts)

Metrics: Free Cash Flow, OCF vs Net Income, FCF Margin
Thresholds: Positive & growing FCF excellent • OCF/NI >1.2x excellent (cash earnings exceed accounting)

4. GROWTH & CONSISTENCY (25 pts)

Metrics: Revenue Growth, Net Income Growth, FCF Growth, Piotroski F-Score
Thresholds: Growth via log-linear regression • Piotroski 8-9 excellent, 6-7 good

Score Interpretation:

75-100

GREAT BUSINESS

65-74

GOOD BUSINESS

50-64

AVERAGE BUSINESS

30-49

WEAK BUSINESS

0-29

POOR BUSINESS

→ View full MSFT quality analysis & detailed breakdown

VALUATION SIGNAL

MARGIN OF SAFETY

Is this stock cheap or expensive relative to what the business has historically generated for owners?

+96.3%

Undervalued

Growth gap unavailable — insufficient data for reverse DCF calculation.

🎯 Expected Annual Return →

203.0%

5-year annualised assuming price converges to intrinsic value

💰 How is Margin of Safety calculated? +

Margin of Safety measures how much discount or premium you're paying relative to a stock's intrinsic value. It's Benjamin Graham's core principle: the larger the margin, the lower your downside risk.

Formula: (Intrinsic Value − Current Price) ÷ Intrinsic Value × 100%

How We Calculate Intrinsic Value (DCF Method):

Step 1: Calculate current Owner Earnings (OCF − Maintenance CapEx)

Step 2: Calculate company-specific growth rate using log-linear regression on 16 quarters of Owner Earnings

Step 3: Project 10 years forward using the calculated growth rate

Step 4: Discount each year's cash flow to present value using 10% discount rate

Step 5: Calculate terminal value using 3% perpetual growth rate

Step 6: Sum all discounted cash flows = Intrinsic Value

What The Percentages Mean:

+50% or more

EXCELLENT — Very undervalued

+25% to +50%

GOOD — Attractive discount

0% to +25%

FAIR — Reasonable value

0% to -25%

CAUTION — Slight premium

-25% or worse

POOR — Overvalued

"Price is what you pay, value is what you get." — Warren Buffett

→ View full MSFT valuation analysis · → View full MSFT Brina Gap analysis

📈 How is Brina Gap calculated? +

Brina Gap measures the difference between the growth a business can fundamentally sustain and the growth the market is already pricing in.

Formula: Fundamental Growth Rate − Market-Implied Growth Rate

The Two Components:

Fundamental Growth Rate = ROIC × Reinvestment Rate

What the business can sustainably grow at based on how much it reinvests and what return it earns on that capital. Grounded in historical financials.

Market-Implied Growth Rate = Reverse DCF

The growth rate the current Enterprise Value implicitly assumes. Calculated by back-solving a 10-year DCF model (10% WACC, 3% terminal growth) until the present value of projected cash flows equals EV.

What The Gap Means:

Gap > +5% Market Underestimates — potential upside

+2% to +5% Slight Underestimate

-2% to +2% Fairly Priced — market consensus matches fundamentals

-5% to -2% Slight Overestimate

Gap < -5% Market Overestimates — price embeds optimism fundamentals don't support

A positive gap (market underestimates) combined with a positive Margin of Safety is the strongest combined signal — the business is both cheap historically and forward economics are stronger than the price suggests.

Critical Financial Health Indicators

Return on Equity (Profitability):EXCELLENT (33.2%)

Debt-to-Equity (Solvency Risk):GOOD (0.30x)

Operating Margin (Operational Efficiency):EXCELLENT (46.8%)

Return on Capital (Capital Efficiency):EXCELLENT (29.1%)

📊 Valuation Trilogy

Three interconnected metrics for complete valuation analysis

Click any metric for full methodology and detailed analysis

Zyberno's Verdict

MICROSOFT CORPORATION (MSFT) stock report — Zyberno Score 78/100 (GREAT BUSINESS), Margin of Safety +96.3%, 203% expected annual return. Full financial analysis on Zyberno.

According to Zyberno's DCF model, MICROSOFT CORPORATION (MSFT) trades at $507.29 against an estimated intrinsic value per share of $13,758.38 — a +96.3% Margin of Safety based on Owner Earnings of $178.24B TTM, projected at 56.4% growth for 10 years with a 2.5% terminal growth rate. Zyberno's model translates this into a 5-year expected return of 203.0% annually.

Over the trailing twelve months, MSFT generated $178.24B in Owner Earnings. Capital was deployed as follows: $4.58B returned via share buybacks, $26.45B paid as dividends, $115.95B invested in capital expenditures. Owner Earnings have grown at 56.4% annually over the trailing five years using log-linear regression.

DIVISION I: EXECUTIVE SUMMARY

A. Market Valuation

Market Price & Capitalization (2)

Current Price:507.29

Market Cap:$3.75T

Valuation Multiples (4)

P/E Ratio:

28.26x

📊 Click to view full MSFT P/E analysis →

P/B Ratio:8.52x

P/S Ratio:11.36x

Peg Ratio:1.06x

Enterprise Metrics (3)

Enterprise Value:$3.82T

Ev Ebitda Ratio:23.90x

Pfcf Ratio:56.26x

B. Profitability Assessment

Return Metrics (3)

ROE:

33.2%

📊 Click to view full MSFT ROE analysis →

ROA:19.4%

Roic:

29.1%

📊 Click to view full MSFT ROIC analysis →

Margin Analysis (3)

Operating Margin Ttm:46.8%

Net Margin Ttm:40.3%

Ebitda Margin:48.2%

TTM Performance (3)

Gross Margin Ttm:67.9%

Operating Margin Ttm:46.8%

Net Margin Ttm:40.3%

Yield Metrics (3)

Earnings Yield:$3.54

Owner Earnings Yield:$4.73

Dividend Yield:0.7%

C. Log-Linear Regression Growth Trends

Revenue Growth (Linear) (1)

Revenue Growth Rate (Linear):22.5%

Earnings Growth (Linear) (1)

Net Income Growth Rate (Linear):23.4%

Cash Flow Growth (Linear) (2)

Free Cash Flow Growth Rate (Linear):3.2%

Operating Cash Flow Growth Rate (Linear):26.0%

Operating Growth (Linear) (1)

Operating Income Growth Rate (Linear):20.9%

D. Financial Stability

Liquidity Ratios (3)

Current Ratio:1.23x

Quick Ratio:1.22x

Cash Ratio:0.12x

Leverage Analysis (3)

Debt To Equity Ttm:0.30x

Debt-to-Equity Ratio:0.30x

Debt To Ebitda:0.57x

Coverage Ratios (2)

Interest Coverage Ratio:185.03x

Times Interest Earned:185.03

Capital Structure (4)

Working Capital:38,885,000,000.00

Cash And Cash Equivalents:20,935,000,000.00

Long Term Debt:$65.12B

Net Debt:$70.92B

DIVISION II: FINANCIAL STATEMENTS ANALYSIS

A. Income Statement Analysis

Revenue Components (2)

Revenue TTM: $331.84B

Linear Growth: 22.5%

📊 Click to view full MSFT Revenue analysis & methodology →

Cost Of Revenue Ttm:$106.37B

Profitability Breakdown (2)

Gross profit TTM: $225.47B

Linear Growth: 16.1%

📊 Click to view full MSFT Gross Profit analysis & methodology →

Operating income TTM: $155.24B

Linear Growth: 20.9%

📊 Click to view full MSFT Operating Income analysis & methodology →

Bottom Line Performance (3)

Net income TTM: $133.75B

Linear Growth: 23.4%

📊 Click to view full MSFT Net Income analysis & methodology →

Income Before Tax:$44.05B

Ebitda Ttm:159,937,000,000.00

Operating Expenses (5)

Operating Expenses:19,879,000,000.00

R And D Expense:9,997,000,000.00

Sga Expense:2,287,000,000.00

Income Tax Expense:$8.28B

Interest Expense:839,000,000.00

Expense Ratios (3)

R And D To Revenue Percentage:11.1%

Sga To Revenue Percentage:2.5%

Ebitda Margin:48.2%

B. Balance Sheet Analysis

Asset Composition (5)

Total Assets:$758.38B

Current Assets:$207.71B

Ppe Net:313,076,000,000.00

Goodwill:119,651,000,000.00

Intangible Assets:$18.61B

Liability Structure (4)

Total Liabilities:315,989,000,000.00

Current Liabilities:168,825,000,000.00

Long Term Debt:$65.12B

Short Term Debt:$26.74B

Equity & Capital (3)

Equity:$442.39B

Retained Earnings:$328.27B

Common Stock:117,406,000,000.00

Working Capital Items (3)

Accounts Receivable:80,876,000,000.00

Inventory:1,397,000,000.00

Accounts Payable:42,416,000,000.00

Special Items (2)

Contract Liabilities:75,712,000,000.00

Stock Based Compensation:3,122,000,000.00

C. Cash Flow Analysis

Operating Activities (2)

Operating cash flow TTM: $182.94B

Linear Growth: 26.0%

Free cash flow TTM: $66.99B

Linear Growth: 3.2%

📊 Click to view full MSFT Free Cash Flow analysis & methodology →

Investment Activities (2)

Investing Cash Flow:-$54.83B

Capital Expenditures Ttm:115,948,000,000.00

Financing Activities (3)

Financing Cash Flow:-$11.78B

Dividends Paid Ttm:26,445,000,000.00

Stock Repurchase:4,579,000,000.00

Capital Transactions (3)

Common Stock Issuance:2,009,000,000.00

Long Term Debt Issuance:$0.00

Long Term Debt Repayments:$0.00

Non-Cash Items (1)

Depreciation Amortization Ttm:42,800,000,000.00

DIVISION III: OPERATIONAL METRICS

A. Per Share Analysis

Earnings Per Share (3)

EPS (Basic TTM):18.00

Eps diluted TTM: $17.95

Linear Growth: 23.6%

📊 Click to view full MSFT EPS analysis & methodology →

Earnings Per Share Ttm:$18.00

Revenue & Cash Per Share (3)

Sales Per Share Ttm:44.67

Operating Cash Flow Per Share:$24.62

Fcf Per Share Ttm:9.02

Book Value & Capital (2)

Book Value Per Share:$59.55

Cash Per Share:2.82

Dividend Policy (1)

Dividend Payout Ratio:21.79x

B. Operational Efficiency

Asset Utilization (2)

Asset Turnover Ttm:0.48x

Working Capital Turnover Ttm:8.53x

Receivables Management (2)

Receivables Turnover Ttm:4.10x

Days Sales Outstanding Ttm:88.96

Inventory Management (2)

Inventory Turnover Ttm:76.14x

Days Inventory Outstanding Ttm:4.79

Payables & Cash Cycle (2)

Days Payable Outstanding:145.54

Cash Conversion Cycle:-51.79

C. Quality & Risk Metrics

Financial Quality Scores (2)

Financial Strength Score:80.00

Quality Score:155.00

Market Metrics (2)

Beta:0.00x

Volatility Category:unknown

DIVISION IV: INVESTMENT ANALYSIS

A. Value Investment Framework

Owner Earnings Analysis (2)

Owner earnings TTM: $178.24B

Linear Growth: 56.4%

📊 Click to view full MSFT Owner Earnings analysis & methodology →

Owner Earnings Yield:$4.73

Growth Assessment (1)

Owner Earnings Growth Rate:$56.45

Intrinsic Value Models (1)

Intrinsic Value:

$102.21T

📊 Click to view full MSFT DCF valuation →

Margin of Safety (1)

Margin Of Safety:

96.3%

📊 Click to view full MSFT valuation analysis →

Return Scenarios (1)

Theoretical 5-Year Return:

203.0%

📊 Click to view full MSFT expected return analysis →

Investment Assessment (1)

Buffett Assessment:Excellent margin of safety

B. Log-Linear Regression Growth Analysis

Growth Rates (Log-Linear Regression) (3)

Revenue Growth Rate (Linear):22.5%

Net Income Growth Rate (Linear):23.4%

Operating Income Growth Rate (Linear):20.9%

Cash Flow Growth Rates (2)

Free Cash Flow Growth Rate (Linear):3.2%

Operating Cash Flow Growth Rate (Linear):26.0%

Other Growth Rates (3)

Gross Profit Growth Rate (Linear):16.1%

Book Value Growth Rate (Linear):29.6%

Owner Earnings Growth Rate:$56.45

C. Company Profile & Context

Corporate Information (6)

Symbol:MSFT

Company Name:MICROSOFT CORPORATION

Sector:Technology

Industry:Software

Exchange:NASDAQ

Country:United States

Market Classification (3)

Market Cap Category:N/A

Price Category:premium

Volume Category:N/A

Share Structure (3)

Shares Outstanding:7.43B

Shares Outstanding Basic:7.43B

Shares Outstanding Diluted:7.45B

Data Processing Info (3)

Processing Version:v3.0

Last Updated:2026-09-01 00:06:27 UTC

Data Timestamp:2026-09-01T00:06:27.007850