Valuation of Microsoft with 15-20% future growth rate.
Obviously we see 10 posts a day about Microsoft. Everyone talks about it being cheap. Historically Microsoft maintained a PE ratio of 25 to 32. But historically especially it did very well with its cloud business that seemed to be pushing its margins and maintaining high net profit growth rates thus justifying its high valuation.
If I were to tell you not to look in the past but assume that Microsoft will have 15-18 % net profit growth in the next 5 years. Where the data center business will be the primary profit maker but the investments too will weigh heavily on the net profits.
How would you value Microsoft then? Will you still call it cheap/ at a fair valuation/ or expensive?