Microsoft Shares Down 12% to $425 at Discounted P/E of 25.6
GOOG•Microsoft shares fell 12% over six months to $425, trading at a P/E of 25.6 versus its 36.3 historical average. The company generated $83 billion in revenue (+18.3%), a 46.8% operating margin, and holds $78 billion cash against a 1.8% debt-to-equity ratio.
1. Recent Stock Performance
Microsoft shares fell 12% over the past six months to $425, down from a peak of $542 in October 2025. This decline reflects investor concerns over rising capital expenditure compressing near-term returns.
2. Valuation Metrics
At a P/E of 25.6, the stock trades below its three-year average of 36.3 and above the S&P 500’s 23.7. It also registers a P/S of 10.1 versus the benchmark’s 3.2 and a P/FCF of 44.0 compared to 19.6.
3. Growth and Profitability
Revenue rose 18.3% year-on-year to $83 billion in the latest quarter, reflecting a 15.3% annualized three-year growth rate. The operating margin stands at 46.8%, net income margin at 39.3%, and operating cash flow margin at 53.5%.
4. Balance Sheet and Risk Profile
The company holds $78 billion in cash against $57 billion in debt, yielding a debt-to-equity ratio of 1.8%. Historical downturns saw share drops of 28.2% in 2020, 37.6% in 2022, and 59.1% in 2008, with full recoveries varying from four months to five years.
