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Microsoft reported adjusted EPS of $3.23 for calendar Q4 2024, which beat street expectations of $3.15. Microsoft has now beaten earnings expectations for the last 8 straight quarters.

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Earnings results came in 2.5% above street expectations, which was below the 8 quarter average of 5.9%.

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While the growth rate remained consistent at 10%, which was also a slowdown from the 17% average over the last 8 quarters.

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Sales came in $69.632 billion in Q4, which also beat street expectations of $68.870 billion. MSFT has also beaten sales expectations for the last 8 quarters straight.

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Sales results came in 1.1% above expectations, which was slightly below the 8 quarter average of 1.9%.

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While the growth rate slowed to 12%, which is also slightly below the 8 quarter average of 13%.

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As I type this, the stock is trading down about 5% and testing the bottom of the triangle that I mentioned on LinkedIn yesterday. It was a decent quarter for Microsoft, but nothing too exciting given the huge run up already in the stock price.

Forward guidance was lowered a little as well. Right now, the stock trades on a forward PE of about 30x on expected growth of 10% in EPS and 12.5% in sales, and a dividend yield of about 0.80%. A PE to growth (or PEG ratio) of about 3 isn’t much to get excited about. You’d need to see either a lower stock price, or an increase in the expected growth rate.

Microsoft is a fabulous company that deserves inclusion as a core holding. But in regards to putting new money to work here, there isn’t much margin of safety in my opinion.

In terms of the technicals. Watch if price can hold the lower trend line in the triangle. If it fails, it could fall back into the $380-$385 area again. And if for some reason it fails there as well, I’ll be watching the $360 area. I’d consider adding to positions there if price ever got back there. Barring a decline in the broader market (S&P 500) it seems unlikely that price would pull back that far. But anything is possible.

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