Microsoft’s (NASDAQ:MSFT) stock price is up 26.23% YTD, sitting at record highs ahead of the quarterly earnings. Investors are optimistic about the company’s ability to extend its cloud dominance.
Microsoft is one of the leading tech companies in the world. Founded in 1975, it employs over 160,000 people and is headquartered in Redmond, Washington, United States.
Microsoft’s stock price had a blast in the last few years. After consolidating between $25 and $50 for more than a decade, the price broke higher and never looked back ever since. It currently trades at record highs, above $280, up 26.23% YTD and 37.68% in the last 12 months.
The rise in the stock price is even more impressive if one considers that Microsoft is a dividend-paying company. It has a 17-year dividend growth history and a dividend payout ratio of 28.84%.
Is Microsoft Stock Price Too High?
The COVID-19 pandemic brought tremendous interest in the tech sector. As remote working became the norm during the pandemic, tech companies benefited from the change. Microsoft was one of such companies, with products and services in strong demand, ranging from software to hardware and cloud services.
Many investors are wondering if the Microsoft stock price valuation is too high at the current levels. It trades at a P/E Non-GAAP (TTM) ratio of 38.67% vs the 26.62 sector median. The gross profit margin (TTM) of 68.38%, surpassing the sector median by 40.69%.
What to Expect from the Upcoming Earnings?
Microsoft has consistently beaten expectations, and this is what investors expect for the quarter that has ended recently. The EPS consensus for Q4 FY2021 is $1.92.
Out of the 64 analysts covering Microsoft’s share price, 57 have buy ratings, and seven issued neutral ratings, while none has a sell recommendation. Mizuho has recently maintained its buy recommendation, with a target of $310.