June 3, 2019

MSFT – Market expectations are for fading Uniform ROA, but management is confident about Azure cloud, compliance security, and operating costs


  • Microsoft Corporation (MSFT:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 22.0x Uniform P/E. However, even at these levels, the market has bearish expectations, while management is confident in the potential of Azure, the value of their compliance security, and their ability to reduce operating expenses
  • Specifically, management is confident in the integration of Dynamics 365 in company data systems, the potential to move SaaS applications to the Azure cloud, and the growth in Azure’s installed user base. Moreover, they are confident in the competitive position of Azure, and in the value their compliance security brings to customers looking to use SaaS applications. Furthermore, they are confident their investments into reducing operating expense will improve margins and that they benefited from onetime KPI tailwinds.
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