Microsoft stock has not been performing well over the past 10 years. Initially, the stock was overpriced due to the dot com bubble. However, in recent years, people are discounting the growth of MSFT based on past reactions.
Currently, the Financial ratios are as follows:
P/E: 9.61 (very low)
Forward P/E: 8.74
PEG: 0.89 (Warren Buffett and Peter Lynch will like this)
From a financial valuation standpoint, Microsoft is trading at a steep discount, possibly due to fear of its latest bout of acquisitions. Lately, MSFT has acquired SKYPE and now rumors are spreading around that MSFT is planning to acquire NOKIA.
From a Buffett standpoint, the margin of safety is huge. There is consumer monopoly as Microsoft is still the leading PC software maker.
From Peter Lynch perspective, there is huge growth.
This is a value investor stock at the moment.
However, from a technical trader point of view, this is a no go.
Technical Chart
There is a Head and shoulders (HS) pattern within a HS with a price target of $22.5
For value investors, we can enter MSFT when the time is ripe, perhaps at $22.5.
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