Microsoft (NASDAQ: MSFT) share price has recently hit an all-time high of $150 amid stronger than expected growth in financial numbers. MSFT stock price rose more than 47% year to date. However, the shares look fairly valued despite a huge appreciation.
MSFT shares are trading around 25 times to earnings and 6 times to book value. In addition, the company’s strategy of returning substantial cash to investors is adding to sentiments.
It has returned almost $7.9 billion in the form of share repurchases and dividends in Q1 of the fiscal year 2020. This represents a 28% increase from the same period last year. The company currently offers a quarterly dividend of $0.51 per share, yielding around 1.5%. It has raised dividends in the past 16 successive years.
Cloud Strength Supports Microsoft Share Price
The company has been generating double-digit growth in revenues and high double-digit growth in earnings over the past couple of quarters. The growth is driven by a strong demand for cloud along with its investments in high margin areas.
MSFT has reported commercial cloud revenue of $11.6 billion in the first quarter, representing an increase of 36% compared to the same period last year.
“The world’s leading companies are choosing our cloud to build their digital capability,” said Satya Nadella, chief executive officer of Microsoft. “We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity.”
Its Q1 consolidated revenue grew 14% year over year while earnings per share jumped 21% from the past year period.
Strong Outlook Supports Bullish Sentiments
The company expects second-quarter revenue to stand around $11.5 billion, up from the consensus of $11.3 billion. Moreover, the company anticipates double-digit revenue growth in fiscal 2020.
The earnings per share are likely to increase by 25% from fiscal 2019. The sustainable growth in the top and the bottom lines would also offer support to cash generation and cash returns. Overall, Microsoft shares are well set to extend the upside momentum in the coming days.
