Using the PEG framework with analyst consensus forward EPS growth of 20.5% plus 0.9% dividend yield, Microsoft Corporation has a fair value of $337.73 based on NTM EPS (FY2026) of $16.48. The current PEG ratio is 1.10.
PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.
PEG is most informative for high-growth companies — the PEG sweet spot.
| EPS Growth RateForward | 19.6% |
| Dividend Yield | +0.9% |
| Adjusted Growth (clamped 8–25%) | 20.5% |
| Fair P/E | 20.5x |
| NTM EPS (FY2026) | $16.48 |
| Fair Value | $337.73 |
| Period | EPS Est. | Growth | Analysts |
|---|---|---|---|
| FY2025 (actual) | $13.64 | — | — |
| FY2026E | $16.48 | +20.8% | 37 |
| FY2027E | $19.01 | +15.3% | 40 |
| FY2028E | $22.51 | +18.4% | 30 |
| FY2029E | $26.76 | +18.9% | 15 |
| FY2030E | $33.41 | +24.8% | 20 |
5Y Forward EPS CAGR: 19.6%
| Year | Net Income | EPS | YoY |
|---|---|---|---|
| FY2021 | $61.3B | $8.05 | — |
| FY2022 | $72.7B | $9.65 | +19.9% |
| FY2023 | $72.4B | $9.68 | +0.3% |
| FY2024 | $88.1B | $11.80 | +21.9% |
| FY2025 | $101.8B | $13.64 | +15.6% |
4Y Historical EPS CAGR: 14.1%
The PEG Fair Value uses the Price/Earnings-to-Growth framework. A stock is fairly valued when its P/E ratio equals its earnings growth rate (PEG = 1.0). This model adds dividend yield to the growth rate per the original PEGY formula.
Growth rate priority: analyst consensus forward EPS CAGR (when ≥ 3 analysts cover the stock), falling back to historical EPS CAGR. Using EPS rather than net income avoids distortion from share buybacks. The growth rate is clamped between 8% and 25% — below 8% would undervalue stable earners, while above 25% would overvalue unsustainable spikes.