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MSFT, Cashflow jumps towards 20 billion dollars
Current 288 Target 342 +18%
January 26 2022
1 minute read
Sales jumped 14%
Costs down profit down on higher non cash costs
Cashflow jumps higher
Balance sheet lower leverage
Valuation, a 18% higher target price
1 minute read
Sales jumped 14%
- Sales jumped 14% in the fourth quarter to 51,728 million dollars vs our 50,767 million dollars forecast.
- This brings the quarterly average to 5% growth.
- We predict average growth of 4% in this next 12 months to bring sales to 59,494 million dollars in the fourth quarter of 2022.
Costs down profit down on higher non cash costs
- The cash cost ratio went from -58% to -54% but profit from 20,505 to 18,765 million dollars on higher non cash costs in the fourth quarter.
- The average cost ratio is at -55% now.
- We use a higher average -56% cost ratio to predict a 21,946 million dollars profit in the fourth quarter of 2022.
Cashflow jumps higher
- Free cashflow went from 13,275 to 18,169 million dollars in the fourth quarter with a better -1,161 million dollars investment Cashflow.
- Average quarterly Cashflow is at 15,076 million dollars now.
- We assume higher -5,865 million dollars investment spending which with higher sales gives a 20,546 million dollars Cashflow in the fourth quarter of 2022.
Balance sheet lower leverage
- Cash increased 19,165 to 20,604 million dollars in the fourth quarter.
- Liabilities declined 183,440 to 180,379 million dollars so net cash improved -164,275 to -159,775 million dollars
- With our forecast cashflow & a -63,118 million dollars equity payout -10,180 million dollars liabilities payment net cash will be -149,595 million dollars in 12 months time.
Valuation, a 18% higher target price
- MSFT capital paid from the last 27 quarters improved 169,007 to 180,993 million dollars in the fourth quarter. with a -11,986 million dollars equity payout & will be 254,291 million dollars in12 months time.
- At the current market value of 2,166,000 million dollars based on our forecasts it’s at 6 X assets with a 4 years payback & a 2.9% yield.
- Our cashflow forecast is 73,298 million dollars which means an 30 X valuation. A 35 X valuation gives a 18% higher target price of 342 dollars.