MicroStrategy Incorporated (MSTR) is primarily known for its business intelligence software services. However, the company’s hefty Bitcoin investments have made headlines recently, nudging some to perceive MSTR more as a cryptocurrency player than a traditional software company. Is this warranted? We delve into MicroStrategy’s core business vis-a-vis its substantial Bitcoin holdings, before commencing an in-depth financial performance analysis.
MicroStrategy: An Overview of Financial Performance
Looking at a longer horizon, in the last five years, the company’s revenue growth may seem uninspiring at -0.28%. In stark contrast, MSTR scored an eye-popping 1807.12% earnings growth over the same period.
Probing further into profitability ratios, we note that Return on Assets (RoA) and Return on Equity (RoE) stand at -3.98% and -5.99% respectively. The Return on Invested Capital (RoIC), at 13.83%, and Debt Equity Ratio, at 100.79%, hints at the company’s risk management efficiency.
Turning to the valuation ratios, the Price to Earnings (P/E) Ratio rests at 48.54, with a Price to Book (P/B) Ratio of 11.6. A lofty Price to Cash Flow (P/CF) Ratio of 1922.04 reveals the market’s decidedly optimistic view of the company’s future cash-generating ability.
Analyst Coverage and Recommendations on MicroStrategy:
Stock Target Advisor currently rates MicroStrategy’s stock as a ‘Hold’. Out of six market analysts currently covering MSTR, the average rating is a ‘Strong Buy’ at a target price of $1854.82. Maximum and minimum target prices sit at $2890 and $975 respectively.
MicroStrategy operates in the Software – Application sector. Here, an examination of sector performance is in order, along with Stock Target Advisor’s rating for the sector. A peek into the average one-month and one-week returns offers additional insight, as does a look at rankings by top analysts in the sector.
Conclusion:
MicroStrategy with its unique hybrid nature, offers a fascinating case study. The company straddles both digital asset investing and enterprise analytics software provision offering investors an intriguing blend of both ‘Old’ and ‘New’ economy exposure.
Muzzammil is a content writer at Stock Target Advisor. He has been writing stock news and analysis at Stock Target Advisor since 2023 and has worked in the financial domain in various roles since 2020. He has previously worked on an equity research firm that analyzed companies listed on the stock markets in the U.S. and Canada and performed fundamental and qualitative analyses of management strength, business strategy, and product/services forecast as indicated by major brokers covering the stock.
