MeritValue

MICROSOFT CORP

MSFTdata completeness 100%18 fiscal years on file
The thesis, from the filings

MICROSOFT CORP earns about 27% on invested capital, far above its ~9% cost of capital, with a roughly flat share count — a real edge showing up in the numbers. The estimate methods put fair value between $100.97 and $232.67 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$168.1B1$198.3B2$211.9B3$245.1B3$281.7B3
Net income$61.3B4$72.7B5$72.4B6$88.1B6$101.8B6
Operating cash flow$76.7B7$89B8$87.6B9$118.5B9$136.2B9
Capital expenditure$20.6B10$23.9B11$28.1B12$44.5B12$64.6B12
Free cash flow (derived)$56.1B7$65.1B8$59.5B9$74.1B9$71.6B9
Total debt$116.3B13$99.6B14$94.5B15$96.6B16$86.3B16
Cash & equivalents$14.2B17$13.9B18$34.7B19$18.3B20$30.2B20
Diluted shares7.61B7.54B7.47B7.47B7.46B

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$460.12
your share of equity
Profit it earned you last year
$136.41
Free cash flow it threw off
$95.93
Debt you’d be carrying
$115.61

10 shares is a claim on $460.12 of net worth that earned you $136.41 and generated $95.93 of cash last year, against $115.61 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
27% avg · 5y
FY21 26%FY22 30%FY23 28%FY24 26%FY25 25%

It earned about 27% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
−2% shares · 5y

Share count is roughly flat over 5 years — little dilution, little buyback. Total debt has fallen 26% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $100.97 and $232.67 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$232.67
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth8.5%
  • fcfBase$71.6B
DCF · Growth Exit 5Y
$189.49
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth8.5%
  • fcfBase$71.6B
Earnings Power Value
$100.97
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$72.7B
  • growthAssumed0.0%
Graham Number
$118.83
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years8.5%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $189.49
The three cases
Bear0.0%$129.55
Base8.5%$189.49
Bull13.5%$234.26

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 8.5%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-06-30 · accession 0000950170-23-035122 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-06-30 · accession 0000950170-24-087843 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-06-30 · accession 0000950170-25-100235 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-06-30 · accession 0000950170-23-035122 (NetIncomeLoss)
  5. 10-K · period ending 2022-06-30 · accession 0000950170-24-087843 (NetIncomeLoss)
  6. 10-K · period ending 2023-06-30 · accession 0000950170-25-100235 (NetIncomeLoss)
  7. 10-K · period ending 2021-06-30 · accession 0000950170-23-035122 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-06-30 · accession 0000950170-24-087843 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-06-30 · accession 0000950170-25-100235 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-06-30 · accession 0000950170-23-035122 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-06-30 · accession 0000950170-24-087843 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-06-30 · accession 0000950170-25-100235 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-06-30 · accession 0001564590-22-026876 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-06-30 · accession 0000950170-23-035122 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-06-30 · accession 0000950170-24-087843 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-06-30 · accession 0000950170-25-100235 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-06-30 · accession 0001564590-22-026876 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-06-30 · accession 0000950170-23-035122 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-06-30 · accession 0000950170-24-087843 (CashAndCashEquivalentsAtCarryingValue)
  20. 10-K · period ending 2024-06-30 · accession 0000950170-25-100235 (CashAndCashEquivalentsAtCarryingValue)