Microsoft Corporation (MSFT) Two-Stage Excess Return Model - Discounting Cash Flows
Microsoft Corporation
MSFT (NASDAQ)

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Two-Stage Excess Return Model

Used to estimate the value of companies based on two stages of growth. An initial period of high growth, represented by [Sum of discounted excess returns in Growth Stage], followed by a period of stable growth, represented by [Discounted excess return in terminal stage]. Excess Return models are better suited to calculate the intrinsic value of a financial company than an enterprise valuation model (such as the Discounted Free Cash Flow Model).

Read more: GitHub Documentation

Interactive Assumptions

Results

Estimated Value 347.7 USD
Book value of equity invested 43.3 USD
Sum of discounted excess returns in Growth Stage 52.01 USD
Terminal stage EPS 22.22 USD
Terminal stage Book Value 59.69 USD
Terminal stage Equity Cost 5.19 USD
Discounted excess return in terminal stage 252.4 USD
Excess Returns in the Terminal Stage 383.1 USD
Terminal Cost of Equity (the discount rate) 8.7%
Terminal year's excess return 17.02 USD
Average historical Return on Equity 37.22%
Average historical Payout Ratio 45.6%
Payout Ratio in stable stage 88.55%
Yield of the U.S. 10 Year Treasury Bond 4.26%

Historical and Forecasted Data

In USD

Edit Chart Values 2025 2026 2027 2028 2029

amounts of USD except for #

2024 LTM 2025 2026 2027 2028 2029
Beginning Book Value 27.7 36.13 36.13 42.29 48.15 53.28 57.25
Ending Book Value 36.13 43.3 42.29 48.15 53.28 57.25 59.69
EPS 11.86 12.99 13.45 15.74 17.92 19.83 21.31
Return on Equity 42.74% 35.99% 37.22% 37.22% 37.22% 37.22% 37.22%
Dividend per Share 3.08 3.32 7.29 9.88 12.79 15.86 18.87
Payout Ratio 25.97% 25.56% 54.19% 62.78% 71.37% 79.96% 88.55%
Retained Earnings 8.78 9.67 6.16 5.86 5.13 3.97 2.44
Equity Cost 2.41 3.14 3.14 3.68 4.19 4.64 4.98
Cost of Equity 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7%
Excess Return 9.45 9.85 10.3 12.06 13.73 15.19 16.33
Discounted Excess Return
9.48 10.21 10.69 10.88 10.76

amounts of USD except for #

Average LTM 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Net Income 49,950 96,635 88,136 72,361 72,738 61,271 44,281 39,240 16,571 25,489 20,539 12,193
Total Stockholders Equity 149,842 321,891 268,477 206,223 166,542 141,988 118,304 102,330 82,718 87,711 71,997 80,083
Return on Equity 37.22% 35.99% 42.74% 43.45% 51.23% 51.79% 43.27% 47.44% 18.89% 35.4% 25.65% 13.58%
Dividends Paid to Common Shareholders 16,628 24,681 22,887 20,774 19,040 17,358 15,905 14,502 13,244 12,316 11,650 10,548
Payout Ratio 45.6% 25.56% 25.97% 28.7% 26.19% 28.33% 35.91% 36.99% 80% 58.03% 69.34% 86.58%
Shares Outstanding 7,653 7,434 7,431 7,446 7,496 7,547 7,610 7,673 7,700 7,746 7,925 8,177
Earnings per Share 6.53 12.99 11.86 9.72 9.7 8.12 5.82 5.11 2.15 2.74 2.12 1.49
Dividend per Share 2.19 3.32 3.08 2.79 2.54 2.3 2.09 1.89 1.72 1.59 1.47 1.29
Dividend Growth Rate 10.13% 7.79% 10.39% 9.84% 10.43% 10.05% 10.58% 9.88% 8.18% 8.16% 13.95% 12.17%
Book Value 19.82 43.3 36.13 27.7 22.22 18.81 15.55 13.34 10.74 11.32 9.08 9.79
discounting cash flows home logo

Discounting Cash Flows

Are you finding our services helpful? Review us on trustpilot logo Trustpilot
Have a question? Contact us