MicrosoftMSFT -3.46%92 3-Year ROIIC % is 12.52 as of Jun. 2025, which is 25% below its 10-year median of 16.73. 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 2,634 Software companies, Microsoft ranks better than 60.29% on this metric.
3-Year Return on Invested Incremental Capital (3-Year ROIIC %) measures the change in earnings as a percentage of change in investment over 3-year.
Microsoft's 3-Year ROIIC % for the quarter that ended in Jun. 2025 was 12.52%. High ROIIC is generally an indication that your business is capital efficient or has a higher operating leverage.
The industry rank for Microsoft's 3-Year ROIIC % or its related term are showing as below:
MSFT's 3-Year ROIIC % is ranked better than 60.29% of 2634
companies
in the Software industry
Industry Median: 5.375
vs MSFT: 12.52
Microsoft (NAS:MSFT) 3-Year ROIIC % Explanation
Return on Incremental Invested Capital (ROIIC) is an extension of Return on Investment Capital (ROIC). ROIC % tells investors how efficiently that profitability is earned per dollar of company capital. ROIIC narrows the focus even further and shows how profitable each additional unit of capital investment could be. ROIIC % is a more powerful metric than ROIC because it measures how much money the company can generate going forward on future capital investments.
High ROIIC is generally an indication that your business is capital efficient or has a higher operating leverage.
Be Aware
It's important to keep in mind that when tracking ROIIC, the metric is better suited to forecasting the trend of future returns rather than measuring current return on investment.
Microsoft 3-Year ROIIC % Related Terms
Microsoft 3-Year ROIIC % Historical Data
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The historical data trend for Microsoft's 3-Year ROIIC % 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: 3-Year ROIIC % Comparison
For the Software - Infrastructure subindustry, Microsoft's 3-Year ROIIC %, along with its competitors' market caps and 3-Year ROIIC % 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 3-Year ROIIC % vs Software Industry
For the Software industry and Technology sector, Microsoft's 3-Year ROIIC % distribution charts can be found below:
* The bar in red indicates where Microsoft's 3-Year ROIIC % 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.
** Annual data of NOPAT and Invested Capital was used to calculate 3-Year ROIIC %.
*** Please be aware that the ROIIC (Return on Invested Capital) calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.
Microsoft (MSFT) has a 3-Year ROIIC % of 12.52 as of Jun. 2025. 3-Year ROIIC % measures the change in earnings as a percentage of change in investment over 3-year. View historical data on Microsoft and its competitors. This is 25% below median its historical median of 16.73. According to the industry distribution chart, Microsoft ranks #1046 out of 2634 companies in the Software industry, placing it in the top 39.7%.
Is Microsoft's 3-Year ROIIC % too high?
Microsoft's current 3-Year ROIIC % of 12.52 is 25% below median its 10-year median of 16.73. The Software industry median 3-Year ROIIC % is 5.38. Microsoft's value of 12.52 is 132.9% above this industry median. Based on the distribution chart, Microsoft ranks #1046 out of 2634 companies in the Software industry, which is above the industry midpoint. 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 3-Year ROIIC % compare to ORCL and PLTR?
According to the Software industry distribution chart, Microsoft ranks #1046 out of 2634 companies for 3-Year ROIIC %. This puts Microsoft in the upper half of its industry. The industry median 3-Year ROIIC % is 5.38. Microsoft's value of 12.52 is 132.9% above this benchmark. While the company's 10-year median is 16.73 vs. the industry median of 5.38, 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 3-Year ROIIC % for a Software company?
The median 3-Year ROIIC % among Software companies is 5.38, based on 2,634 companies in the industry. Companies in the top quartile (top 25%) have a 3-Year ROIIC % significantly above this median, while those in the bottom quartile fall well below. However, 3-Year ROIIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Microsoft's current 3-Year ROIIC % of 12.52 is 132.9% 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 3-Year ROIIC % mean?
A high 3-Year ROIIC % can signal that a stock is expensive relative to its fundamentals. 3-Year ROIIC % measures the change in earnings as a percentage of change in investment over 3-year. View historical data on Microsoft and its competitors. For the Software industry, the median 3-Year ROIIC % is 5.38 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Microsoft's current 3-Year ROIIC % is 12.52, which is 25% below median its own 10-year median of 16.73. 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 3-Year ROIIC % is 12.52, which is 25% below median its 10-year median of 16.73 and 132.9% above the Software industry median of 5.38. 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 3-Year ROIIC % calculated?
3-Year ROIIC % is calculated from a company's financial statements. For Microsoft (MSFT), the current 3-Year ROIIC % is 12.52 as of Jun. 2025. 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:
3-Year ROIIC %: 12.52 (25% below median its 10-year median of 16.73)
GF Value™: $558.08 vs. price of $352.83 (36.8% below fair value)
Industry Position: 132.9% above the Software median (#1046 of 2634)
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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