Microsoft with robust guidance
$MSFT calms fears with robust guidance despite a challenging environment. The company’s fundamentals remain strong as it was mainly hurt by things outside of its control, like a strong US dollar, supply chain issues, and general macro pressures.
The awesome thing about Microsoft is that it has multiple great product segments with many years of growth at scale left. I’m talking about Azure, Dynamics 365, LinkedIn, and the gaming segment.
The stock is undervalued in my book and should be a great long-term holding, that’s why I have it in my portfolio.
Azure is really on fire, but my concern is that the stock seems to be trading at 30x this years P/E. Even thought they have a big moat and everything still seems a bit high for this environment. Any thoughts on the valuation?
@rihardjarc I don't use the absolute PE value as a valuation metric, because every company is different and IMO you can't compare companies with it. Growth isn't taken into account either. I only use PE to see where it is compared to the historical PE average, in the case of Microsoft, it's fine, I'm not concerned. IMO this only works with stable companies, not with crazy growth companies.
I much prefer doing a DCF model, depending on the growth rate, I get a valuation of around $300.