Is MSFT a high-quality business?

AlphaMadera's AlphaQuality grade scores Microsoft Corporation on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how MSFT compares to a Buffett-style quality bar.

What is Microsoft Corporation's AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to MSFT based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes MSFT a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

MSFT - Microsoft Corporation

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $551.33 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Platform & Compounding FCF

AlphaQuality — archetype-weighted quantitative grade

A 88.1 / 100 composite

Composite Grade

Composite of six pillars weighted for platform & compounding fcf businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 25%

A- 86.2

5yr Avg ROIC 17.6% 86/100
Operating Margin Trend +1.06 pp/yr 86/100

Capital Efficiency

Weight: 15%

A 88.2

5yr Avg ROE 23.1% 97/100
5yr Share-Count CAGR -0.5% 72/100

Growth Quality

Weight: 25%

A 89.9

5yr Revenue CAGR 13.8% 88/100
5yr EPS CAGR 14.1% 86/100
Revenue-Growth Years (5) 5/5 100/100

Cash Generation

Weight: 20%

A 92.6

5yr FCF Margin 30.0% 100/100
5yr FCF/NI Conversion 0.84x 84/100

Balance Sheet

Weight: 10%

A+ 97.3

Net Debt / EBITDA 0.11x 94/100
Interest Coverage (EBIT/Int) 52.84x 100/100
Altman Z-Score 7.82 100/100

Stability

Weight: 5%

C 53.5

EPS Volatility (σ/μ) 0.64 19/100
Piotroski F-Score 6 67/100
Negative-Revenue Years (5) 0/5 100/100

10 of 11 gurus held; 1 new buy; 4 added; 5 trimmed; 2 full exits.

Holders: 10 -1
Avg Δ position: -8.8%
New buys: 1
Full exits: 2

Loeb sold -100%
Mandel sold -100%
Ackman new

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (25%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (20%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (10%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (5%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.