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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Richie who wrote (18409)	3/21/1999 10:42:00 AM
From: Richie	Respond to of 74651

This isn't the percentage gains, but it's still interesting, I'm working on the split gains. What does the company do? Like it or not, Microsoft rules. With a market value that far outstrips its racing sales (and a market influence being challenged on antitrust grounds), Microsoft is the world's #1 software company. Its software includes the Windows (95, 98, and NT) operating systems, Excel spreadsheets, word processing programs (MS Word), presentation tools (PowerPoint), and reference works (Encarta). The Microsoft Network provides online content, and its Internet Explorer browser is battling Netscape Navigator for market share. With NBC, the company operates cable news channel MSNBC. It also provides free e-mail (Hotmail) and other services. CEO and co-founder Bill Gates, the world's richest man, owns about 20% of the company. © 1998 Hoover's Inc. (Austin, TX) All rights reserved. How much does the company sell and earn? Investors need to know how much stuff or services a company sells, and how much of that total it keeps as income (or profit) to grow its business or return to shareholders. The more of each, the better. In general, look for companies that sell and earn more than peers. Microsoft one-year sales: $16,660.0 Mil. Difference from the average for the Application Software group: 2,343.80% Microsoft one-year income: $6,360.0 Mil Difference from the average for the Application Software group: 5,546.71% Sales & Income (past 12 months) Company Industry Sales $16,660.0 Mil $681.7 Mil Income $6,360.0 Mil $112.6 Mil How fast is the company growing? It may not be fair, but public companies are judged by investors more on their sales and earnings growth rates than on the absolute value of their sales and earnings. Look for companies that consistently grow faster than peers. Microsoft one-year sales growth: 32.40%. Difference from the average for the Application Software group: 11.80 pct. pts. Microsoft one-year income growth: 104.10%. Difference from the average for the Application Software group: 54.50 pct. pts. Sales & Income Growth (past 12 months) Company Industry Sales Growth 32.40% 20.60% Income Growth 104.10% 49.60% How profitable is the company? Investors prefer companies that increase profit margins -- the percentage of sales that they keep -- every year. This is accomplished either by lowering expenses or raising prices. Look for companies that consistently find ways to squeeze more profits out of sales than their peers. Microsoft one-year net profit margin: 38.2% Difference from the company's 5-year average net profit margin: 10.0 pct. pts. Difference from average for the Application Software group: 22.4 pct. pts. Net profit margins (%) Company 38.2% Company 5-Yr Avg. 28.2% Industry 15.8% How is the company's financial health? The "debt/equity ratio" shows how much a firm has borrowed long-term as a percentage of its stock equity. The lower, the better. Microsoft debt/equity ratio: 0.00. Average debt/equity ratio for the Application Software group: 0.06. Company Industry Debt/equity ratio 0.00 0.06 How has the stock performed? Investors need to know how a stock has performed relative to all other stocks. Generally they attempt to hold the market's top-performing securities -- those that have done better over the past year than the majority of stocks in their industrial group and all stocks in our database. Look for a positive trend in the 12-month, 6-month and 3-month periods. Microsoft price change in past 3 months: 24.2%. Difference from the average for the Application Software group: 18.80 pct. pts. Percentage of all stocks that Microsoft outperformed: 85% Microsoft price change in past 6 months: 62.5%. Difference from the average for the Application Software group: 29.30 pct. pts. Percentage of all stocks that Microsoft outperformed: 90% Microsoft price change in past 12 months: 109.1%. Difference from the average for the Application Software group: 70.80 pct. pts. Percentage of all stocks that Microsoft outperformed: 98% Microsoft Industry Group 3 Months 24.2% 5.4% 6 Months 62.5% 33.2% 12 Months 109.1% 38.3% Where is the stock's support and resistance? Investors should note the average prices at which a stock traded over the past 50- and 200-day periods. These "moving averages" tend to provide a floor, or support, for stocks trading above them and a ceiling, or resistance, for stocks trading below them. Stocks that sink below support are in danger of further weakening; stocks that rise above resistance have a shot at new highs. What's the best guess for the stock price in 1-2 years? Investors fix targets for most stocks by estimating future earnings per share and then applying a price-to-earnings "multiple", also known as the P/E ratio. Companies with the most consistent earnings history or strongest growth prospects receive the highest P/E multiples. We calculate price targets for the current and next fiscal year by applying the stock's current multiple to the average professional analyst's estimate. Valuation using Microsoft's current multiple (P/E): Fiscal Year Est Low/High Price Range Avg. Est. Price % Change for Average 6/1999 $168.17-$201.66 $190.74 11.42% 6/2000 $195.10-$232.96 $220.58 28.86% Microsoft current price: $171.19 Microsoft current multiple (P/E): 72.80 Microsoft average 6/1999 estimate: $2.62 Microsoft low 6/1999 estimate: $2.31 Microsoft high 6/1999 estimate: $2.77 Microsoft average 6/2000 estimate: $3.03 Microsoft low 6/2000 estimate: $2.68 Microsoft high 6/2000 estimate: $3.20 What's the best guess for the stock if it were valued like its peers? Investors often come to believe that a stock is undervalued or overvalued compared to other stocks in its industrial group. To calculate an alternate target price for the current and next fiscal year based on those beliefs, investors can apply the average PE multiple for a company's industrial group to the average professional analyst's earnings estimate for the company in those periods. Valuation using the industry's current multiple (P/E): Fiscal Year Est. Price % Change 6/1999 $220.08 28.56% 6/2000 $254.52 48.68% Microsoft current price: $171.19 Application Software group current multiple (P/E): 84.00 Microsoft average 6/1999 analyst estimate: $2.62 Microsoft average 6/2000 analyst estimate: $3.03 How certain is the price estimate? Investors estimate the level of unanimity about a stock's prospects among analysts by calculating the range between the most optimistic and most pessimistic estimates. Average number of analysts covering Microsoft: 23 Microsoft analysts' high/low spread: 20% Microsoft analysts' confidence: Medium Microsoft current price: $171.19 Overhead resistance for Microsoft: $175.93 (52-week high) First support for Microsoft: $158.52 (50-day moving average) Second support for Microsoft: $122.81 (200-day moving average)