MODEL VERDICT
Microsoft Corporation (MSFT) — Relative Valuation
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Popular:
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
Each row records the model's monthly assessment. High Conviction = the model detected notable undervaluation vs peers. Neutral = no notable divergence was found. The return column shows the actual price change over 90 days for reference. This is a quantitative observation log — not investment advice.
| Date | Assessment | Score | Price | Status | 90d Fwd Return |
|---|---|---|---|---|---|
| Feb 28, 2026 | NEUTRAL | 0.24 | $392.74 | CURRENT | — |
| Feb 21, 2026 | NEUTRAL | 0.24 | $397.23 | CURRENT | — |
| Feb 14, 2026 | NEUTRAL | 0.24 | $401.32 | CURRENT | — |
| Feb 11, 2026 | NEUTRAL | 0.24 | $413.27 | CURRENT | — |
| Jan 11, 2026 | NEUTRAL | 0.24 | $479.28 | Below threshold | -13.7% |
Historical model observations for research purposes only. Past quantitative patterns do not predict future results. Not a recommendation to buy, sell, or hold any security.
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Forward P/E 71 analyst estimates | $260.18 | -33.8% | 20% | A- | Analyst Est. |
| EV/EBITDA 55 industry peers | $399.99 | +1.8% | 20% | A- | Peer Data |
| Industry Median P/E 45 industry peers | $311.73 | -20.6% | 15% | A | Peer Data |
| Price / Free Cash Flow 67 industry peers | $140.58 | -64.2% | 15% | B+ | Peer Data |
| EV/EBIT 51 industry peers | $287.53 | -26.8% | 8% | B+ | Peer Data |
| EV/FCF 68 industry peers | $150.14 | -61.8% | 7% | B | Model Driven |
| Peg Ratio 25 industry peers | $333.40 | -15.1% | 5% | B | Data |
| EV To Revenue 78 industry peers | $127.02 | -67.7% | 4% | B | Data |
| Price / Sales 79 industry peers | $113.63 | -71.1% | 3% | B | Model Driven |
| Earnings Yield 50 industry peers | $317.42 | -19.2% | 2% | B | Data |
| FCF Yield 67 industry peers | $146.41 | -62.7% | 1% | B | Data |
| Weighted Output Blended model output | $340.80 | -13.2% | 100% | 89 | SLIGHTLY OVERVALUED |
| EPS Growth ↓ | P/E Multiple → | 25× | 27× | 29× (Current) | 31× | 33× |
|---|---|---|---|---|---|
| Bear Case (8%) | $367 | $396 | $425 | $455 | $484 |
| Conservative (12%) | $383 | $413 | $444 | $475 | $505 |
| Base Case (18.8%) | $405 | $438 | $470 | $502 | $535 |
| Bull Case (25%) | $428 | $462 | $496 | $530 | $564 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 35.20 | 35.72 | 24.85 | 41.78 | 5.66 |
| EV/EBIT | 29.37 | 28.89 | 21.63 | 35.57 | 4.28 |
| EV/EBITDA | 25.11 | 24.27 | 18.96 | 32.01 | 4.19 |
| P/FCF | 40.46 | 42.50 | 27.76 | 50.41 | 8.33 |
| P/FFO | 28.20 | 28.51 | 20.74 | 35.07 | 4.93 |
| P/TBV | 23.56 | 23.26 | 17.93 | 30.29 | 4.02 |
| P/AFFO | 42.60 | 47.74 | 28.56 | 50.54 | 8.69 |
| P/B Ratio | 13.02 | 11.95 | 10.51 | 18.02 | 2.62 |
| Div Yield | 0.01 | 0.01 | 0.01 | 0.01 | 0.00 |
| P/S Ratio | 12.13 | 12.81 | 9.12 | 15.22 | 2.11 |
Based on our peer multiples analysis with 28 valuation metrics, the model estimates MSFT's fair value at $340.80 vs the current price of $392.74, implying -13.2% downside potential. Model verdict: Slightly Overvalued. Confidence: 89/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $340.80 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $275.90 (P10) to $381.84 (P90), with a median of $327.89.
MSFT's current P/E of 28.8x compares to the industry median of 22.9x (45 peers in the group). This represents a +26.0% premium to the industry. The historical average P/E is 35.2x over 7 years. Signal: Premium.
78 analysts cover MSFT with a consensus rating of Buy. The consensus price target is $583.67 (range: $392.00 — $675.00), implying +48.6% upside from the current price. Grade breakdown: Strong Buy (0), Buy (62), Hold (16), Sell (0), Strong Sell (0).
The model confidence score is 89/100, based on: data completeness (30), peer quality (25), historical depth (20), earnings stability (12), and model agreement (2). Cyclicality penalty: -0 points. The model shows strong agreement across inputs.
The model flags several key risks: (1) Margin reversion: Current net margin of 39.0% is 4.5 percentage points above the 7-year average (34.5%), with a Z-score of +1.8σ. If margins normalize, fair value could drop to ~$424. (2) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk refers to the possibility that MSFT's current profitability is above its sustainable long-term trend. The model detects a margin Z-score of +1.8σ, meaning margins are 1.8 standard deviations above their historical average. If margins revert to the 7-year mean (34.5%), the model estimates fair value drops by 800.0% to approximately $424. This isn't a prediction — it's a scenario analysis.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.