Why Microsoft Stock Climbed 55% in 2019
Shares of Microsoft (NASDAQ: MSFT) gained 55.3% in value last year, according to data from S&P Global Market Intelligence. That outperformed the 28.9% return of the S&P 500 index.
The stock's performance can be chalked up to a combination of stellar earnings growth and an increase in the price-to-earnings (P/E) ratio. Adjusted (non-GAAP) earnings increased 22% in fiscal 2019, which ended in June, with another 21% year-over-year increase reported for the first quarter of fiscal 2020.
The stock started the year trading for a P/E ratio in the low 20s but ended the year trading at 29.7 times earnings. That extra valuation premium boosted the stock's performance, too. Investors are particularly high on the company's growth prospects in cloud computing, where Microsoft Azure is now in second place behind Amazon Web Services.
Source Fool.com
