Microsoft Corporation (MSFT): investment thesis checklist
What a value investor writing down why they own Microsoft Corporation would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 23.0% in FY2026; between 10.2% and 31.7% over 10 filed years, median 24.5%. Does the thesis need it to stay inside that range?
- Return on equity: 30.2% in FY2026; between 20.0% and 43.7% over 10 filed years, median 34.0%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 2.4% in FY2026; between 1.9% and 5.8% over 10 filed years, median 2.8%. Does the thesis need it to stay inside that range?
- EV to EBIT: 18.57x in FY2026; between 18.57x and 31.20x over 10 filed years, median 27.55x. Does the thesis need it to stay inside that range?
- Price to earnings: 20.78x in FY2026; between 20.78x and 46.30x over 10 filed years, median 34.41x. Does the thesis need it to stay inside that range?
- Gross margin: 67.9% in FY2026; between 65.3% and 69.8% over 10 filed years, median 68.6%. Does the thesis need it to stay inside that range?
- Operating margin: 46.8% in FY2026; between 31.8% and 46.8% over 10 filed years, median 41.7%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: 0.54x in FY2026; between 0.43x and 2.46x over 10 filed years, median 0.74x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 14.6% in FY2026; between 4.1% and 17.1% over 10 filed years, median 13.5%. Does the thesis need it to stay inside that range?
- Share count change: -0.2% in FY2026; between -2.3% and -0.0% over 10 filed years, median -0.7%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Microsoft Corporation's own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.35x
Today 0.28x. Replayed over 10 filed years, it would have broken in 7; most recently FY2023, at 0.37x (10-K, filed 2023-07-27).
Return on Invested Capital stays at or above 18.4%
Today 22.96%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $3.88
Today $3.92. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.35x.
- A filed year in which return on invested capital fell below 18.4%.
- A filed year in which dividend rate fell below $3.88.
4. The published tests it meets today
Of 30 tests value investors published: 4 met, 26 not met, 0 we could not complete. Counts, never a score.
Meets: High returns and growth; ROIC at or above WACC; High returns, low debt; Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.