MicrosoftMSFT -3.46%92 Return-on-Tangible-Equity is 48.30% as of Mar. 2026, which is 30% below its 10-year median of 68.56. GuruFocus rates MSFT with a GF Score™ of 92/100 and a GF Value™ of $558.08 (Significantly Undervalued). The stock has 2 warning signs investors should review. Among 2,473 Software companies, Microsoft ranks better than 84.03% on this metric.
Return-on-Tangible-Equity is calculated as Net Income divided by its average total shareholder tangible equity. Total shareholder tangible equity equals to Total Stockholders Equity minus Intangible Assets. Microsoft's annualized net income for the quarter that ended in Mar. 2026 was $127,112 Mil. Microsoft's average shareholder tangible equity for the quarter that ended in Mar. 2026 was $263,173 Mil. Therefore, Microsoft's annualized Return-on-Tangible-Equity for the quarter that ended in Mar. 2026 was 48.30%.
The historical rank and industry rank for Microsoft's Return-on-Tangible-Equity or its related term are showing as below:
MSFT'
s Return-on-Tangible-Equity Range Over the Past 10 Years
Min: 37.79 Med: 68.56 Max: 85.74
Current: 55.47
During the past 13 years, Microsoft's highest Return-on-Tangible-Equity was 85.74%. The lowest was 37.79%. And the median was 68.56%.
MSFT's Return-on-Tangible-Equity is ranked better than 84.03% of 2473
companies
in the Software industry
Industry Median: 8.78
vs MSFT: 55.47
Microsoft (NAS:MSFT) Return-on-Tangible-Equity Explanation
Return-on-Tangible-Equity measures the rate of return on the ownership interest (shareholder's tangible equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' tangible equity (shareholders equity minus intangibles). Return-on-Tangible-Equity shows how well a company uses investment funds to generate earnings growth. Return-on-Tangible-Equitys between 15% and 20% are considered desirable.
Be Aware
Net Income is used.
Because a company can increase its Return-on-Tangible-Equity by having more financial leverage, it is important to watch the leverage ratio when investing in high Return-on-Tangible-Equity companies. Like Return-on-Tangible-Asset, Return-on-Tangible-Equity is calculated with only 12 months data. Fluctuations in company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Asset light businesses require very few assets to generate very high earnings. Their Return-on-Tangible-Equitys can be extremely high.
Microsoft Return-on-Tangible-Equity Related Terms
Microsoft Return-on-Tangible-Equity Historical Data
* Premium members only.
The historical data trend for Microsoft's Return-on-Tangible-Equity can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
MSFT vs ORCL, PLTR, PANW: Return-on-Tangible-Equity Comparison
For the Software - Infrastructure subindustry, Microsoft's Return-on-Tangible-Equity, along with its competitors' market caps and Return-on-Tangible-Equity data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Microsoft Return-on-Tangible-Equity vs Software Industry
For the Software industry and Technology sector, Microsoft's Return-on-Tangible-Equity distribution charts can be found below:
* The bar in red indicates where Microsoft's Return-on-Tangible-Equity falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
In the calculation of annual Return-on-Tangible-Equity, the net income of the last fiscal year and the average total shareholder tangible equity over the fiscal year are used. In calculating the quarterly data,
the net income data used here is four times the quarterly (Mar. 2026) net income data.
Return-on-Tangible-Equity is displayed in the 10-year financial page.
What does a Return-on-Tangible-Equity of 48.30% mean?
Microsoft (MSFT) has a Return-on-Tangible-Equity of 48.30% as of Mar. 2026. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on Microsoft and its competitors. This is 30% below median its historical median of 68.56. Over the past decade, Microsoft's Return-on-Tangible-Equity has ranged from 37.79 to 85.74. According to the industry distribution chart, Microsoft ranks #395 out of 2473 companies in the Software industry, placing it in the top 16%.
Is Microsoft's Return-on-Tangible-Equity too high?
Microsoft's current Return-on-Tangible-Equity of 48.30% is 30% below median its 10-year median of 68.56. Over the past 10 years, this metric has ranged from a low of 37.79 to a high of 85.74. The Software industry median Return-on-Tangible-Equity is 8.78. Microsoft's value of 48.30% is 450.1% above this industry median. Based on the distribution chart, Microsoft ranks #395 out of 2473 companies in the Software industry, which is in the top quartile — a strong position relative to peers. Overall, Microsoft has a GF Score™ of 92/100 and is considered Significantly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Microsoft's Return-on-Tangible-Equity compare to ORCL and PLTR?
According to the Software industry distribution chart, Microsoft ranks #395 out of 2473 companies for Return-on-Tangible-Equity. This places Microsoft in the top 16% of its industry — outperforming the majority of peers. The industry median Return-on-Tangible-Equity is 8.78. Microsoft's value of 48.30% is 450.1% above this benchmark. Historically, Microsoft's own Return-on-Tangible-Equity has ranged from 37.79 to 85.74 over the past decade. While the company's 10-year median is 68.56 vs. the industry median of 8.78, Microsoft has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Return-on-Tangible-Equity for a Software company?
The median Return-on-Tangible-Equity among Software companies is 8.78, based on 2,473 companies in the industry. Companies in the top quartile (top 25%) have a Return-on-Tangible-Equity significantly above this median, while those in the bottom quartile fall well below. However, Return-on-Tangible-Equity should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Microsoft's current Return-on-Tangible-Equity of 48.30% is 450.1% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Return-on-Tangible-Equity mean?
A high Return-on-Tangible-Equity can signal that a stock is expensive relative to its fundamentals. Return on tangible equity is the ratio of current-period net income to average two-period tangible equity. View historical data on Microsoft and its competitors. For the Software industry, the median Return-on-Tangible-Equity is 8.78 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Microsoft's current Return-on-Tangible-Equity is 48.30%, which is 30% below median its own 10-year median of 68.56. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Microsoft stock overvalued right now?
Based on GuruFocus' analysis, Microsoft (MSFT) is currently considered Significantly Undervalued. The stock's GF Value™ is $558.08, compared to a current price of $352.83 — trading 36.8% below its estimated fair value. The current Return-on-Tangible-Equity is 48.30%, which is 30% below median its 10-year median of 68.56 and 450.1% above the Software industry median of 8.78. Microsoft's overall GF Score™ is 92/100 with 2 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Return-on-Tangible-Equity calculated?
Return-on-Tangible-Equity is calculated from a company's financial statements. For Microsoft (MSFT), the current Return-on-Tangible-Equity is 48.30% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Microsoft (MSFT) Overvalued in 2026?
Based on GuruFocus' analysis, Microsoft stock appears to be undervalued.
The current stock price of $352.83 is trading 36.8% below its estimated GF Value™ of $558.08.
GuruFocus considers Microsoft to be Significantly Undervalued.
Key valuation signals for MSFT:
Return-on-Tangible-Equity: 48.30% (30% below median its 10-year median of 68.56)
GF Value™: $558.08 vs. price of $352.83 (36.8% below fair value)
Industry Position: 450.1% above the Software median (#395 of 2473)
No single metric tells the full story. See the MSFT stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Microsoft develops and licenses consumer and enterprise software. It is known for its Windows operating systems and Office productivity suite. The company is organized into three equally sized broad segments: productivity and business processes (legacy Microsoft Office, cloud-based Office 365, Exchange, SharePoint, Skype, LinkedIn, Dynamics), intelligence cloud (infrastructure- and platform-as-a-service offerings Azure, Windows Server OS, SQL Server), and more personal computing (Windows Client, Xbox, Bing search, display advertising, and Surface laptops, tablets, and desktops).
92GF Score
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