Microsoft stock – Is it overvalued?
Whether you have invested in Microsoft stock or not, you can know how the stock is faring by reading this article. Though the stock has surged up almost 40% for the previous year, a late retrospection reveals the possibility of over purchase of the stock levels. If you want to understand the financial aspects, read this article on how this stock is faring.
Discounted Cash Flow method used for stock valuation, generally increases the stock value, compared to other valuation models. This may also be one of the reasons why Microsoft stock (Microsoft support number) has a higher valuation of almost 39% peak, in spite of dealing fairly. Currently, the Microsoft’s business has a promising potential, with all the latest range of Microsoft Laptops introduced recently. The cloud business division is also doing great, with almost $6.8 billion of revenue in Q3 2017. The future prospects of Microsoft are also good; hence it is very evident that Microsoft is absolutely on the right track.
When a comparative analysis is done, the closely resembling competitor is picked for the purpose. In the case of Microsoft, finding another tech giant within the same industry and brand worth is tough. This is also a leading factor which contributes to the higher P/E commonly called price-earnings ratio. A higher P/E ratio can only mean that the stock is quite overvalued.
To further deepen the analysis, try using the Discounted Cash Flow method which will consider the annual anticipated CFs of 5 years and discount them by using a projected market risk, say 10 or 15%. However, the other factors like WACC, i.e. cost of capital have to be taken on an assumption basis only.
If you are deciding if the time is good enough to invest in the Microsoft stock, take a look at the facts before you decide to go ahead on the investment path.
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