Microsoft Q3 earnings: still cheap

Microsoft Q3 Earnings: Still Cheap

Microsoft, the tech giant, has recently released its Q3 earnings report, and the results are impressive. The company has reported a revenue of $41.7 billion, which is a 19% increase from the same period last year. The net income for the quarter was $15.5 billion, which is a 44% increase from the previous year. These numbers are impressive, especially considering the ongoing pandemic and the economic uncertainty it has caused.

Despite the impressive earnings, Microsoft’s stock price has not seen a significant increase. The company’s stock price has remained relatively stable, with a slight increase of 1.5% after the earnings report was released. This is surprising, considering the company’s strong financial performance and the fact that the tech industry has been one of the few sectors that have thrived during the pandemic.

One reason for the lack of a significant increase in Microsoft’s stock price could be the fact that the company’s valuation is already high. Microsoft’s price-to-earnings ratio (P/E ratio) is currently at 35. This means that investors are willing to pay $35 for every dollar of earnings that Microsoft generates. This is a high valuation, especially when compared to other tech companies like Apple, whose P/E ratio is currently at 28.

However, despite the high valuation, Microsoft’s stock is still considered cheap by many investors. This is because the company’s earnings growth rate is still high, and the company has a strong balance sheet with a significant amount of cash reserves. Microsoft’s earnings growth rate for the next five years is estimated to be around 12%, which is higher than the industry average of 10%.

Furthermore, Microsoft has a significant amount of cash reserves, which gives the company the flexibility to invest in new technologies and acquisitions. The company’s cash reserves currently stand at $130 billion, which is higher than the market capitalization of many other tech companies.

In conclusion, Microsoft’s Q3 earnings report is impressive, and the company’s financial performance is strong. Despite the high valuation, Microsoft’s stock is still considered cheap by many investors, thanks to the company’s high earnings growth rate and strong balance sheet. Microsoft’s stock is a good investment option for long-term investors who are looking for a stable and reliable tech company with a significant amount of growth potential.