Fundamental analysis of the selected stock

The aim of the thesis was to perform a fundamental analysis of Microsoft, compare the intrinsic value of the stock with the market price, and finally determine investment recommendations for potential investors. The first part was devoted to global fundamental analysis, where the impact of various macroeconomic factors on the stock was examined. The most important macroeconomic factor turned out to be the inflation rate, which is the reason for the Fed's current restrictive monetary policy. The second part of the paper consisted of sectoral fundamental analysis. Microsoft and its competitors' revenues are growing at an average annual rate of 9.72%. This rate, together with the high growth potential, suggests that the sector is still in a development phase. The last part of the paper was a fundamental analysis of the company itself. A total of 5 models were calculated to determine the intrinsic value of the selected company's stock. The intrinsic value of the shares came out higher than their market price as of January 1, 2023 in the amount of $239.22. The only model that valued the company's shares lower than their market price was the FCFF cash flow model. All 3 parts of the fundamental analysis performed recommend buying Microsoft stock. However, the global analysis suggests uncertain future macroeconomic developments. In the long term, this is not a problem for the company due to its strong position in key markets, but in the short term it may negatively affect the share price. For these reasons, the investment recommendation is to buy and hold the shares for the long term