Microsoft Corporation [NASDAQ: MSFT]: has been on a growth trajectory for the past 5 years. This is due to its strong position in the cloud market, with cutting edge products like Azure. The company is now looking to open up a new growth avenue through customized cloud services.
On the 6th of this month, the company’s CEO announced a series of products dubbed the power platform. The platform adds new services to the existing portfolio. The new services include app connectivity and business intelligence among. The goal is to allow Microsoft customers derive as much value as possible out of Microsoft cloud services. While the power platform products are not yet major revenue drivers for Microsoft, they holds lots of promise for the future. That’s because, they entrench the relationship that Microsoft has built with the business world. For instance, a product like PowerApps allows businesses to create applications. This will enable Microsoft to compete effectively in business applications development with Google and other companies angling for market share in this space.
Even as it looks into new market, Microsoft continues to record strong growth. In the last quarter, Microsoft recorded strong growth, and part of the key value drivers was cloud computing. Cloud computing pushed the company’s revenues up by 41% in the last quarter. As per its latest earnings call transcript, the company revealed that several major corporations in the financial services market, such as National Bank of Canada and Refinitiv, are now using the Microsoft 365 service. This is a good indicator that with a more customized offering in the cloud computing space, Microsoft could make an even stronger showing, and generate even more impressive numbers in the future with the power platform.
Looking at the company’s financial stats, it is clearly a growth company. The company’s quarterly revenues (yoy) grew by 14%, an indicator that its core product offering is gaining market attention. Its market strength is further cemented by its high profit margins which grew by 28.58%, and an operating margin of 33.49%. Another key indicator to its strong market position is its levered free capital that stands at $26.23 billion, and a current ratio of 2.97. Essentially this means that even in a high interest rates environment, the company’s core operations are likely to remain unaffected, which makes it a strong investment, even in strenuous economic conditions.
Therefore, it is not surprising that most analysts hold a positive view of this company. Late last year, Macquarie upgraded Microsoft from neutral to outperform. This year, another analyst Mizuho has initiated an upgrade for Microsoft to buy status.
From a look at the charts, Microsoft has corrected for the last 3-months, but it’s holding firmly above the 3-month 50-day moving average at $122.37. It also has some firmer support at $110.91 on the 3-month 200-day moving average. In spite of this correction, it has still outperformed the S&P 500 by a huge margin. In the last 52-weeks, it has gained by 28.20% while the S&P 500 has only changed by 5.91%.