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Is Microsoft Stock A Buy Or Sell After Recently Announced Earnings?

Aug. 02, 2021 2:52 PM ETMicrosoft Corporation (MSFT)28 Comments


  • The market's reaction to Microsoft's Q2 2021 (calendar year) or Q4 FY 2021 (fiscal year) earnings was relatively muted, as MSFT had a mixed quarter.
  • I think that Microsoft's earnings are expected to rise in the near future, but probably at a slower pace than the growth expectations implied by its current valuations.
  • Microsoft stock remains a Hold for me, after the company's recently announced earnings.
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French headquarters of Microsoft, Issy-les-Moulineaux, France
HJBC/iStock Editorial via Getty Images

Elevator Pitch

I continue to assign a Neutral rating to Microsoft Corporation (NASDAQ:MSFT).

My initiation article on MSFT was published on May 18, 2021, and Microsoft's stock price has increased by +16% in the past two and a half

Asia Value & Moat Stocks is a research service for value investors seeking value stocks with a huge gap between price and intrinsic value, leaning towards deep value balance sheet bargains (i.e. buying assets at a discount e.g. net cash stocks, net-nets, low P/B stocks, sum-of-the-parts discounts) and wide moat stocks (i.e. buying earnings power at a discount in great companies like "Magic Formula" stocks, high-quality businesses, hidden champions and wide moat compounders). Sign up here to get started today!

This article was written by

The Value Pendulum profile picture

The Value Pendulum is an Asian equity market specialist with over a decade of experience on both the buy and sell sides.

He is the author of the investing group Learn more

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (28)

The Delta variant has already told everyone that's willing to listen, except Governors in several states, that Working From Anywhere (WFA) isn't going away over the next 24 months.

So, whether MSFT appears to be 'over' valued on a traditional method of valuing publicly held firms; there's a new metric in town.

My guess is the share price is going significantly higher as a result.
treespace profile picture
MSFT to require proof of vaccination for all employees, vendors and operating system users. Customers with Azure accounts can continue to use the service provided they are masked at all times when logging in. That's close to 90% of the population so coronavirus should be eradicated in weeks.
@treespace And just when you thought it was safe to go back in the water, an epsilon viral variant appears. I would feel better about the whole covid business if it weren't for the complacency of a hard-core group of folks that NEVER will accept vaccination, come hell or high water. Meanwhile, they put themselves and the rest of us at continual risk of infection while trumpeting their Constitutional rights. I guess that's the price one must pay to live in a free country, but I still can't help watching it all in amazement.
@sanberdoo You are right on point! Unfortunately, the Delta variant (and the Lamda variant standing in the wings, auditioning in Peru currently) isn't alone in killing the unvaccinated in America.

Don't follow the protocols, it's your right but don't complain when one of those unprotected children don't make it as a result. One or more of them might be your relative.
@sanberdoo It's not a vaccine. However, if you got the shot you, don't have to worry about me cause you are protected and, likewise, I don't have to worry about you.

Thank you very much.
I've been reading articles about how MSFT is overbought at then-current levels and how the company is perpetually cresting as it approaches an inevitably slowing maturity phase in its life. These articles have never been accurate or prescient, except possibly for 2 seconds under Steve Ballmer. The contrarian nonsense continues like the Groundhog Day movie.
treespace profile picture
@esadams Take a look at IBM and Oracle. Two names I would not have touched with a ten foot pole because they are a decade into the maturity phase and running on fumes, right? WRONG! Both are crushing it with all-time highs while advancing their respective customer bases with new technology that is continuously evolving.

Consider how that bodes for MSFT, GOOG (really getting a nice share of the monstrous cloud market that will expand for decades) and AWS. All are going to keep expanding revenue for years to come.
JGC67 profile picture
Buy. I can't imagine selling MSFT.
If I were to equate the author's "hold" recommendation with "trade-in-narrow-range", then perhaps it might be worthwhile to sell cash-covered puts on MSFT. The worst that can happen is that I'll end up owning a super-high-quality stock at a lower price than current market. Meanwhile, I get to play with OPM. What's not to like?
CaptainSolo profile picture
The Irish Times reported that a Dublin-based subsidiary of Microsoft Corp. used its Bermuda “tax residence” to book $314 billion in tax-free profit. www.linkedin.com/...
E. Dantes profile picture
Microsoft is my largest holding and the base from which I build everything else. Before I invest into other holdings I always compare it to the long term potential and continued success of Msft in all of their various areas. More times than not I force myself to invest more money into Msft first before I can add or initiate a new position in other companies. I have an enormous position (by my standards) in Msft but I view it as Thanos with all of the Infinity Stones. Dominant with the Cloud Stone, duopoly with the Xbox Stone, a must have with the subscription based Office Stone, unlocked potential of the LinkedIn Stone and the tried and true Windows Stone. You don't have to like it, but Sadella snapped his fingers and eliminated half of the competition.
paulsan profile picture
I don't think FB is a Microsoft's peer - why haven't you add TIK-TOK or SNAP into the comparison? ORCL and IBM are dinosaurs and the market fairly evaluate them. I don't have a clear opinion on VMware but it seems they are struggling to accommodate the new cloud reality - for now I'd put them in the same category with IBM/ORCL. I think ADBE is the only right choice in your table. I'd compare MSFT with Sales Force, GOOG, ADBE and AMZN (maybe SAP and ORCL too, but not necessarily).
MSFT is a buy
So what you're saying is FB is a bargain (based on your peer evaluation chart)
Steve Kean profile picture
Come on folks. Must be chasing FOMO if someone thinks $285 is a great entry price. It's a HOLD.
Bud's Bet profile picture
@Nirish70 I took a little off the table at $289. Holding the rest.
"My initiation article on MSFT was published on May 18, 2021, and Microsoft's stock price has increased by +16% in the past two and a half months from $245.18 as of May 17, 2021 to $284.91 as of July 30, 2021." This statement early in the article by The Value Pendulum says a lot. So, did The Value Pendulum sit it out through this upswing and lose out on the gain plus one dividend? Maybe, now MSFT is hold and neutral but too late if we've already missed out. Disc: I have traded in and out of MSFT.
Just keep buying, expect a dividend increase in September
As long as Satya Nadella is at the helm, is difficult to imagine Microsoft not being one of the best long term investments, period.
02 Aug. 2021
MSFT is always a BUY!
Only sell if the fundamentals of the company have changed. In my opinion, msft is firing on all cylinders and if anything, it has run up to far to fast and may be due for a correction.
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