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Microsoft’s Annual Returns Remain Strong, Even With A 16.3% Cloud Growth (NASDAQ:MSFT)

Microsoft’s Annual Returns Remain Strong, Even With A 16.3% Cloud Growth (NASDAQ:MSFT)

HJBC

Thesis

Microsoft Corporation (NASDAQ:MSFT) successfully completed its acquisition of Activision Blizzard, Inc. (ATVI) on October 13th. According to my models, this acquisition has the potential to boost Microsoft’s annual return to up to 20% from its current stock

TABLE OF ASSUMPTIONS
(Current data)
Assumptions Part 1
Equity Value206,223.00
Debt Value79,441.00
Cost of Debt2.51%
Tax Rate18.98%
10y Treasury4.61%
Beta1.2
Market Return10.50%
Cost of Equity11.68%
Assumptions Part 2
EBIT
Tax16,950.00
D&A13,500.00
CapEx28,107.00
Capex Margin13.26%
Assumption Part 3
Net Income72,361.00
Interest1,995.00
Tax16,950.00
D&A13,500.00
Ebitda104,806.00
D&A Margin6.37%
Interest Expense Margin0.94%
Revenue211,915.0

RevenueNet IncomePlus TaxesPlus D&APlus Interest
2024$211,915.0$73,418.80$87,352.68$100,852.68$102,847.68
2025$234,123.7$82,765.02$98,472.68$111,972.68$113,967.68
2026$258,659.9$93,301.00$111,008.25$127,486.12$129,921.18
2027$285,767.4$105,178.22$125,139.60$143,344.35$146,034.61
2028$315,715.8$118,567.41$141,069.87$161,182.48$164,154.68
2029$348,802.9$133,661.04$159,028.07$181,248.48$184,532.16
^Final EBITA^

RevenueNet Income
2024$8,706.0$2,166.00
2025$9,158.7$2,359.42
2026$9,635.0$2,570.12
2027$10,136.0$2,799.63
2028$10,663.1$3,049.64
2029$11,217.5$3,321.97

RevenueNet IncomePlus TaxesPlus D&APlus Interest
2024$220,621.0$78,601.03$93,518.43$107,573.04$109,650.00
2025$253,652.1$90,966.37$108,230.53$122,285.15$124,362.11
2026$291,515.5$105,116.51$125,066.17$143,637.10$146,381.47
2027$334,907.0$121,297.47$144,318.06$165,653.24$168,806.10
2028$384,621.8$139,788.28$166,318.17$190,820.42$194,441.31
2029$441,568.2$160,905.30$191,442.91$219,572.92$223,729.91
^Final EBITA^

Intelligent Cloud
2024$87,910.0
2025$102,239.3
2026$118,904.3
2027$138,285.7
2028$160,826.3
2029$187,041.0

RevenueNet IncomePlus TaxesPlus D&APlus Interest
2024$220,621.0$76,445.18$90,888.46$105,026.36$107,103.32
2025$248,407.6$86,073.22$102,335.60$116,473.50$118,550.46
2026$279,917.2$96,991.30$115,316.50$133,254.24$135,889.42
2027$315,674.7$109,381.27$130,047.39$150,276.55$153,248.36
2028$356,282.3$123,451.80$146,776.36$169,607.74$172,961.84
2029$402,430.9$139,442.31$165,788.05$191,576.75$195,365.29
^Final EBITA^

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