Microsoft

Methodology

Microsoft's transition to predictable subscription revenue through Office 365 and Azure cloud services creates exceptional earnings visibility, making this calculation straightforward and reliable. Recurring revenue streams and enterprise customer stickiness provide confidence in sustainable growth trajectories. The stable business model makes earnings projections more dependable than traditional software licensing.

Methodology

Microsoft consistently commands premium PEG ratios reflecting exceptional business quality, cloud market leadership, and enterprise software dominance combined with durable growth. While ratios appear expensive versus traditional software companies, Azure expansion and AI positioning justify valuations. Compare to Microsoft's historical range and mega-cap cloud peers rather than absolute thresholds.

Methodology

Microsoft offers a modest but steadily growing dividend as management balances shareholder returns with aggressive buybacks and cloud infrastructure investments. The dividend adds some value though capital appreciation from cloud growth dominates total returns. For this premium growth compounder, buyback activity and reinvestment matter more than current yield in driving shareholder value.