Switch to:
Microsoft Corp (NAS:MSFT)
Intrinsic Value: Projected FCF
$37.51 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Microsoft Corp's projected FCF intrinsic value is $37.51. The stock price of Microsoft Corp is $50.16. Therefore, Microsoft Corp's Price to Intrinsic Value: Projected FCF Ratio of today is 0.0.

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Microsoft Corp was 5.45. The lowest was 0.64. And the median was 1.14.


Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Microsoft Corp's FCF(6 year avg) is calculate as

Microsoft Corp Quarterly Data

201309201312201403201406201409201412201503201506201509201512
total_freecashflow 6,9742,6818,9078,1847,0722,8508,1795,0357,2383,574
201103201106201109201112201203201206201209201212201303201306
total_freecashflow 8,0145,3008,0575,3648,8457,0557,8813,8508,7364,109
201003201006201009201012
total_freecashflow 6,9854,8467,6303,695

Add all the Free Cash Flow together and divide 6 will get Microsoft Corp's FCF(6 year avg) = $25,176.83.

Microsoft Corp's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Dec15)*0.8)/Shares Outstanding
=(9.52035159596*25176.8333333+76780*0.8)/8028.000
=37.51

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Microsoft Corp's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=50.16/37.5082592684
=1.34

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Microsoft Corp Annual Data

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
Projected FCF 16.0116.7218.4419.8322.2325.6729.6932.7735.7837.22

Microsoft Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
Projected FCF 33.4433.7034.5335.7836.7236.7237.3537.2237.6037.51
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK