Hey this is tom, and on january 17th, this year i put up this post at 8 51 a.m and i said: there's three companies that are gon na explode. This quarter very unlikely candidates and a lot of people gave me a lot of in the comments. Basically saying well tom oracle, crm, microsoft, what the hell are you talking about if you check every single one of those went ballistic oracle, not only blasted through my target price of 70., it's currently almost at 90. crm went almost at 260 256 right now.

It's pretty much right there on the target price and microsoft has blasted through the original 225, all the way to 270, and it even blasted through my new target price of 270, currently trading in 304, us dollars, meaning we already did 43 on microsoft. Now oracle is a separate. Video crm is a separate video, but microsoft is the topic of this video. Now that we did 43 on microsoft, the question is: are we staying in at 300 or are we checking out because microsoft is a baby of mine? I don't want to give it up, but at the right price, or rather the wrong price, i'm going to be willing to do it, and in this video i want to run a full dcf, a full business analysis and to go over the numbers with you to See if at this price, microsoft still makes sense, let me show you a few stuff, okay, so the first step of any stock analysis i do is to check what other qualified analysts are saying about the stock, and for that i use tip pranks.

I've been using them for over a year recently. They actually gave me an affiliate link it's down below in the comment section. If you want to get it at the 10 discount, you can use my affiliate link i'll make a few dollars, but i've been using. It way before i even had an affiliate link, that's one of my main tools to see what's going on so as you can see, the current price is 304 dollars, and the consensus price according to the pranks is 326.92 essentially 327, but hold on this price doesn't Mean nothing.

I want to see what the good analysts are thinking about the stock, so i'm going to break it down according to just five star analysts, i'm waiting out all the trash, or at least i'm basically keeping the best analyst. So i'm just keeping all the five star ones so right now we have five star and a couple of four four and a half stars, but these are the good analysts. So the first thing i want to show you is that we have 3.5 upside, which is pretty much a break even 1.85, which is again break even 842, really not enough skin. In the game point fourteen fifteen percent: fifteen percent: ten percent - eight percent zero.

Forty five five, six minus ten one, forty three, so as you can see the good analysts, that's why i told you this number is not that important. The good analysts are pretty much on defense they're, pretty much saying that at 300 this company is pretty much broken. Even according to what they're, seeing and in this video i'll show you why i tend to agree with them. As you know, in my videos i don't hold you hostage, so i'm not trying to hide my conclusion.

In fact, i want to give it away right now. I think the right, i think it's currently priced just about right at 300, even according to optimistic actual estimates, but i want to show you why and i'm sure that those of you with the brain want to see the analysis. So i'm sure you'll stay with me and if you just need to go and do your thing, it's fine as well as long as you don't click, nothing don't buy, nothing, don't smash, nothing! There's! No courses. There's no sponsorships just stay with me and give me your attention so now that we know that the smart analyst is seeing kind of a stagnation at 300.

I want to show you my numbers, but before we go through my dcf, i want to show you the fundamentals of this company, as well as the business analysis. So the first thing i want you to notice is the multiples. As you can see, the company is trading at very high multiples. Pe gaap is currently at 37, almost 38.

This is extremely high as a value investor. You kind of want to limit your investments in stock with high price to earnings multiples. I mean you got to really love the stock to pay that much for it. Every single, multiple for this company screams.

It is extremely insanely, expensive and in this video i'll show you how to make an individual decision that suits you the best, because every investor has their own logic, their own risk and their own opinion, and much like everything i say in this video. Well, in fact, everything i see in this video - this is just my opinion, which means it might be inaccurate might be wrong, might be the remix of a madman, not a financial advisor, just the guy on the internet, so you got to do your own research find Out for yourself, if this is a good investment for you now, since my patreon post, which was on january 17th, this stock has gone ballistic, as you can see right here. The stock did 43 34 above my original target price, which was 270. Now, let's not forget, microsoft is a 2 trillion dollar company and right now it's growing at a crazy pace, considering how big it is.

It has 17 and a half percent revenue growth just this year and even next year, they're about to do 15. According to wall street consensus, it's a high growth company with two trillion dollar valuation. This is not something you see every day now the biggest problem for microsoft, i wouldn't say a problem, but i would say a challenge or a hurdle. Is that their cloud business, which is currently their highest growing business, is really capex intensive? I at least anticipate 150 to 180 billion dollars in capex investments from microsoft in the next five years, just to get it going, that's pretty much their entire revenue for one year going just for capex for the cloud business.

However, on the other hand, you might want to say: hey tom: this company went from 90 billion in annual revenue in 2016 within five years to 170 billion, so it has the growth to fuel, even those capex expenses, even everything it's still going to grow like crazy. The question is: will this insane growth continue now it can, but there's really two things or rather three things that need to happen. So the first thing that needs to happen is microsoft needs to improve the way they sell and market their crm and erp system. That's a b2b and it's completely undersold right now.

It's doing abysmal numbers, even though this is going to be a huge 200 billion dollar market in five years. Microsoft is getting their ass kicked in this now. The other thing they have to do and to their credit they already started and doing well in this - is opening up the whole console gaming segment to cross-platform cloud-based subscription. Now that sounds like chinese to you, but i'll explain what it means.

Essentially, microsoft and sony have been at this weird kind of console world for years and i think microsoft have just realized. They don't need to sell printers. I mean what a weird conclusion: there's no need to sell the xbox if we can sell a sas software as a service. So microsoft has been doing this crazy thing where everything is going.

Cloud-Based cross-platform, so essentially any gamer from any device can play with any other gamer with any device, whether they have an xbox or not through a subscription model. Now this has been going ballistic. Sony actually tried doing the same thing and failed on their ass. Only getting about 3 million subscribers in ps now, which is their version of it, but sony, doesn't have the infrastructure, ecosystem and network effects that microsoft has with their products and their devices, and in fact, microsoft have already accumulated 10 times more clients than sony.

With almost 24 million clients as of april, they expect it to go all the way to 30 million by the end of the year, and it seems like this section is actually growing, because it's slow, capex, massive revenues, great margins and you got to remember this - is Going to be a two billion dollar market within five years, which is just there for the taking, because sony has seemed to completely drop the ball now. The most important one is the third aspect, and i think it's even bigger than the other two is azure needs to keep growing as fast as it's growing right now, because it's their fastest growing business right now, 51 year-over-year great ecosystem. You know great push for microsoft. It's currently the second best, or at least the second, in the space behind aws.

They need to keep growing because, as this whole hybrid post pandemic, world actually needs way more cloud. I think microsoft is going to be there and i think this is going to be the main engine for the growth. The question is: can it grow fast enough to justify a 300 valuation? That's the big question and i'll show you why i think it does, but just about nothing beyond 300 69 gross profit, ebitda margin, 48 net income margin. 36.

These are really good numbers. If you take a look at the revenue growth as well, we saw 17 and a half percent this year still anticipated almost 15 next year. Very nice growth, as you can see right here, we talked about this. The multiples are very high, but that's not the one place where you make decisions.

It's another factor to actually conclude, include and consider they're, definitely not cheap, but here's the thing look at this they're also a dividend company which most of the companies we're looking at are not it's not an amazing insane dividend, but it's a very nice addition that you Have to calculate into your cash flow now this company has done really well for us with it 43. It did 41.84 over the past year. The growth has definitely been there on the stock side, as well as on the company side. Now, as you can see right here, they're bidding estimates every single quarter for the past four quarters.

I mean they're going crazy. It's a company, that's worth considering 91 billion in june 2016, five years later, they're pretty much doubled well close to double. This company has been growing like crazy, regardless of any pandemic effects. Look at their stuff.

This is the total debt 82 billion in total debt. Oh my god, that's too much but scroll up to the cash and crash equivalents, 130 billion in cash and cash equivalents. I mean look at the assets right now: total current assets, 184 total assets 333.7. Now, assuming we take out the goodwill, so we're left with about 280 and look at the liabilities, total currents, 88, total abilities, 191., so 191 versus 280 insane ratio and look at the cash flow here.

As far as the cash flow i mean, this company is doing insanely well: net income, 16 billion 39 billion 44 billion 61 billion. I mean this is nothing short of phenomenal. You can see right here that has nothing to do with the pandemic and, as you can see right here on the screen, this is the chart. I have that's available for every single patreon member and channel member to audit me at every single moment to see how the stocks i've talked about are doing.

Microsoft is number 26 on our list. We posted on january 17th. The price was 212. right now.

My target price is 270.. Currently we smashed through it 304 right now so 11 overpriced according to the oil price. So on the screen right now, you're seeing a dcf that i made for this company a few assumptions here worth mentioning. First of all, i assumed a 25 growth for this company.

25 25, as you can see through the entire period of the next five years, 25 is about 10 higher than the guidance they have now as far as the growth anticipated for next year. This is extremely generous just to see the max potential of this company now capex here is 180 billion, told you the cloud business is not going to come cheap and with the 10 discount four percent loan growth and 12 multiple. I didn't use 25 because microsoft is not just a software business. I use 12 just to be conservative, so the valuation that i'm getting here is anywhere between 2.2 trillion and 2.3 trillion anywhere in that range.

As you can see, the price is between 295 and 306 compared to the current 304 price. We seem to be priced just dead center, exactly at which the company is valuated, so i can't see any further upside. I can definitely justify a 300 price, but i can't tell you, without going crazy on my assumptions and adding some crazy growth numbers, that this company is worth any more than 300 and it might go up, it might go down crowd. Psychology is insane, i honestly, don't know, what's going to happen with this company, but i base my decisions on fundamentals, not on the greater full theory.

Maybe it will go up much higher, maybe in six months it's gon na be 400. I have no idea, but for me at 300, that's just enough and i'm getting out at 304, but for you it might be different. You got to do your own research find out for yourself play around with the numbers with the growth numbers. In fact, this whole dcf template is going to be uploaded to our patreon page and for channel members, so you can download it play with it and see what your valuation is.

Thank you so much for hanging out with me. I appreciate it i'll see you in tomorrow's video.