Better Bet Than Microsoft Stock: Pay Less To Get More From S&P 500 Stocks
Microsoft remains a formidable player in the S&P 500; however, a closer look at its valuation, revenue growth, and profitability reveals intriguing contrasts with peers like Meta, Booking Holdings, and Teledyne Technologies. While Microsoft commands a higher price-to-operating income ratio, its competitors exhibit superior revenue and operating income growth. This discrepancy raises questions for investors about whether a more compelling opportunity may lie within these alternatives.
Key Metrics Compared
| Metric | MSFT | META | BKNG | TDG |
|---|---|---|---|---|
| P/EBIT* | 30.6x | 24.0x | 22.4x | 22.9x |
| LTM OpInc Growth | 15.5% | 37.1% | 29.5% | 17.2% |
| 3Y Avg OpInc Growth | 14.6% | 31.0% | 49.4% | 26.2% |
| LTM Revenue Growth | 14.1% | 19.4% | 11.1% | 14.8% |
| 3Y Avg Revenue Growth | 12.0% | 13.0% | 30.7% | 18.7% |
Uncover more peer insights on Microsoft peer comparison and Microsoft counter-intuitive comparison
OpInc = Operating Income, P/EBIT = Price To Operating Income Ratio
Is The Mismatch In Stock Price Temporary
One way to check if Microsoft stock is expensive now versus the other tickers would be to see how these metrics compared across companies exactly a year ago. Specifically, if there has been a marked reversal in the trend for Microsoft in the last 12 months, then there is a chance that the current mismatch is likely to reverse. On the other hand, a persistent underperformance in revenue and operating income growth for Microsoft would reinforce the conclusion that the stock is expensive compared to its peers, but may not revert soon
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Key Metrics Compared 1 Yr Prior
| Metric | MSFT | META | BKNG | TDG |
|---|---|---|---|---|
| P/EBIT* | 32.0x | 25.1x | 21.6x | 21.0x |
| LTM OpInc Growth | 17.1% | 48.4% | -1.5% | 20.2% |
| 3Y Avg OpInc Growth | 14.6% | 23.9% | 77.7% | 27.6% |
| LTM Revenue Growth | 15.0% | 21.9% | 11.7% | 16.9% |
| 3Y Avg Revenue Growth | 12.3% | 12.2% | 38.1% | 18.7% |
OpInc = Operating Income
Additional Metrics To Consider
| Metric | MSFT | META | BKNG | TDG |
|---|---|---|---|---|
| P/S | 13.7x | 10.7x | 7.8x | 10.6x |
| Market Cap (Current) | $ 3.69 Tril | $ 1.82 Tril | $ 187.65 Bil | $ 88.90 Bil |
| LTM Revenue | $ 270.01 Bil | $ 170.36 Bil | $ 24.09 Bil | $ 8.39 Bil |
| LTM Opinc | $ 122.13 Bil | $ 73.12 Bil | $ 7.83 Bil | $ 3.89 Bil |
| LTM Op Margin | 45.2% | 42.9% | 32.5% | 46.3% |
OpInc = Operating Income
Overview of Returns:
Individual Stock Returns YTD:
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Total [1] | Avg | Best | |
|---|---|---|---|---|---|---|---|---|---|
| Returns | |||||||||
| MSFT Return | 43% | 52% | -28% | 58% | 13% | 19% | 231% | ||
| META Return | 33% | 23% | -64% | 194% | 66% | 23% | 252% | <=== | |
| BKNG Return | 8% | 8% | -16% | 76% | 41% | 18% | 181% | ||
| TDG Return | 11% | 3% | 2% | 67% | 32% | 20% | 206% | ||
| S&P 500 Return | 16% | 27% | -19% | 24% | 23% | 6% | 94% | ||
| Monthly Win Rates [3] | |||||||||
| MSFT Win Rate | 67% | 75% | 25% | 67% | 58% | 50% | 57% | ||
| META Win Rate | 58% | 67% | 33% | 92% | 67% | 50% | 61% | ||
| BKNG Win Rate | 50% | 58% | 50% | 75% | 58% | 67% | 60% | ||
| TDG Win Rate | 67% | 50% | 50% | 75% | 75% | 100% | 69% | <=== | |
| S&P 500 Win Rate | 58% | 75% | 42% | 67% | 75% | 50% | 61% | ||
| Max Drawdowns [4] | |||||||||
| MSFT Max Drawdown | -14% | -5% | -36% | -7% | -2% | -16% | -13% | ||
| META Max Drawdown | -29% | -10% | -74% | 0% | -3% | -17% | -22% | ||
| BKNG Max Drawdown | -44% | -15% | -32% | 0% | -6% | -16% | -19% | ||
| TDG Max Drawdown | -56% | -16% | -19% | -1% | -4% | -3% | -16% | ||
| S&P 500 Max Drawdown | -31% | -1% | -25% | -1% | -2% | -15% | -12% | <=== | |
[1] Cumulative total returns since the beginning of 2020
[2] 2025 data is for the year till date (YTD)
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
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