Microsoft Share Forecast February 2022 – Time to Buy MSFT?
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Shares of American multinational technology corporation Microsoft (NASDAQ: MSFT) are in the green today, after closing at $310.98 as of January 31st (19:59 EST). Microsoft shares surged after the company beat analysts’ expectations.
Microsoft – Technical Analysis
According to the financial statement released by Microsoft, the market cap is at $2.331 trillion with total assets worth $340.389 billion. Revenue for 2021 was at $168.09 billion with a profit margin of 36.45% compared to revenue of $143.01 billion in 2020. Microsoft’s revenue rose 20% year over year to $51.7 billion, topping estimates by $910 million. Net income also improved, reaching $18.8 billion after a 21% increase.
Moving averages such as Exponential Moving Average (10)(304.02), Simple Moving Average (10)( 300.43), Exponential Moving Average (20)(308.89) and Simple Moving Average (20)(308.74) are indicating a buy action. Oscillators such as Relative Strength Index (14)(49.20), Stochastic %K (14, 3, 3)(64.00), Commodity Channel Index (20)(16.70), Average Directional Index (14)(29.84) and Awesome Oscillator(−18.24) are neutral.
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Recent Developments
Microsoft has three major segments – productivity and business processes, productivity and business processes and productivity and business processes. All the divisions continued with digital digit growth. The company’s Office Commercial revenues rose 14% year over year and revenue from LinkedIn also increased by 37%. On the other hand, the company’s server products and cloud services revenue rose 29%.
The company also posted an operating margin of 43% in Q2 2022, which dipped from 44.7% in Q1. But this still represents a significant expansion from 41.5% in the prior-year quarter. Over the past year, the company has increased its investments in loud engineering, sales, customer deployment, gaming, and LinkedIn segments. This has enabled the company to return $10.9 billion (more than 100% of its free cash flow) to its investors through buybacks and dividends in Q2.
The report also highlighted the growing rate of cash returns heading directly to shareholders. The company returned $11 billion to investors this quarter, up 9% from last year. This has come from strong buybacks, which crossed $12 billion over the past six months. Microsoft’s spending is being powered by gushing cash flows, with operating cash jumping 16% to $14.5 billion registered in Q2.
Microsoft is in the news lately because of its deal to acquire Activision Blizzard for $95 per share in an all-cash deal. The deal will be complete by Microsoft’s fiscal year 2023 (July 2022 to June 2023) and it may take anywhere from six to 17 months for investors to see that return. This is not the first acquisition in recent years, as Microsoft also acquired LinkedIn for $26.2 billion.
Should You Buy MSFT Shares?
Investors can hardly find any flaws in the company’s latest earnings report. But they should also consider that the shares are trading at 32 times forward earnings. According to analysts, this is a high multiple for a company that is expected to generate mid-teens percentage earnings growth. But the slight premium is understandable in this tough market.
Microsoft has generated stable revenue and earnings growth. It has plenty of cash to allocate towards buybacks, dividends, and fresh investments. It is so well-diversified that it has weathered plenty of economic downturns before and has come out on top. Even if an investor missed out on the company’s massive 360% gain over the past five years, Microsoft shares are still worth buying.
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