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International Paper Company (IP) vs Microsoft Corporation (MSFT): Which Is the Better Buy in 2026?

As of 2026-08-03, IP is undervalued at $41, with a DCF intrinsic value of $124527309897 and a margin of safety of 100%. MSFT is undervalued at $465, with an intrinsic value of $724 and a margin of safety of 36%. Of the two, IP has the wider margin of safety.

IP
International Paper Company
$40.83
VS
MSFT
Microsoft Corporation
$464.72

Rewards

IP
    MSFT
    • ★Microsoft Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
    • ★Gross margin of 67.9% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
    • ★Microsoft Corporation scores 84/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.

    Risks

    IP
    • ⚠ROIC has declined by 9.7 percentage points over the past 4 years, which may signal competitive erosion.
    • ⚠International Paper Company scores only 17/100 on the Economic Moat Score, suggesting limited durable competitive advantages.
    • ⚠Altman Z-Score of 0.87 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
    MSFT
    • ⚠FCF yield of 1.9% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
    • ⚠Insiders have sold $10.5M worth of stock in the past 3 months — significant insider liquidation.

    Key Valuation Metrics

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    IP
    MSFT
    Valuation
    $1.76B
    Free Cash Flow
    $66.99B
    N/A
    FCF Yield
    1.94%
    N/A
    Trailing P/E
    25.90
    13.89
    Forward P/E
    19.96
    Quality & Moat
    1.71%
    ROIC
    20.70%
    -16.48%
    ROE
    34.04%
    29.61%
    Gross Margin
    67.94%
    1.58
    PEG Ratio
    1.52
    Balance Sheet Safety
    0.62
    Net Debt / Equity
    0.12
    N/A
    Interest Coverage
    N/A
    2.34
    Net Debt / EBITDA
    0.27
    4.53%
    Dividend Yield
    0.78%
    IP: 2Ties: 2MSFT: 6
    IPMSFT

    Historical Fundamentals

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    IP

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

    MSFT

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

    Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

    $1 Retained Earnings Test

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    IP
    N/A
    Net losses over 3 years — test not applicable
    Company had negative cumulative retained earnings
    Σ Retained
    $-4.93B
    Δ Market Cap
    +$4.76
    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
    MSFT
    $2.61
    created per $1 retained over 3 years
    Exceptional Value Creator
    Σ Retained
    $251.42B
    Δ Market Cap
    +$657.41B
    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

    Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
    > $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

    Discounted Cash Flow (DCF) Analysis

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    IP
    100.0% Margin of Safety
    Price is 100.0% below estimated fair value
    Current Price: $40.83
    Fair Value: $124527309897.42
    Strongly undervalued
    Undervalued
    Fairly valued
    Overvalued
    Strongly overvalued
    MSFT
    35.8% Margin of Safety
    Price is 35.8% below estimated fair value
    Current Price: $464.72
    Fair Value: $724.34
    Strongly undervalued
    Undervalued
    Fairly valued
    Overvalued
    Strongly overvalued

    Reverse DCF — Market-Implied Growth

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    IP

    What growth rate is the market pricing in at $41?

    -11.8%
    Market-Implied FCF Growth Rate

    Market roughly matching historical growth — reasonable.

    MSFT

    What growth rate is the market pricing in at $465?

    +11.4%
    Market-Implied Owner Earnings Growth
    Standard FCF implies +20.8%

    The market implies +11.4% Owner Earnings growth, below historical trends — potential opportunity.

    Standard FCF implies a more demanding +20.8%, reflecting heavy growth investment expected to generate future returns.

    Economic Moat Score

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    IP
    17/100
    No Moat
    70+ Wide · 40-69 Narrow · <40 None

    No durable moat detected, though reinvestment efficiency shows some competitive positioning. The business lacks consistent evidence of sustainable advantages.

    Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.
    MSFT
    84/100
    Wide Moat
    70+ Wide · 40-69 Narrow · <40 None

    Wide moat driven primarily by revenue predictability. Reinvestment Efficiency is the area most vulnerable to competitive pressure.

    Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.

    Forensic Accounting

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    IP
    -2.75
    Unlikely Manipulator
    Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

    M-Score Trend

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
    MSFT
    -2.58
    Unlikely Manipulator
    Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

    M-Score Trend

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

    Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

    Ownership Breakdown

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    IP
    Insiders 0.2%Institutions 99.5%Retail & Other 0.2%
    No. of Institutional Holders1,181
    High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.
    MSFT
    Insiders 0.1%Institutions 75.8%Retail & Other 24.2%
    No. of Institutional Holders8,079
    High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

    High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

    Insider Buying Activity

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    IP
    0
    Buys (3M)
    4
    Buys (12M)
    Total value (12M): $4.32M
    TOZIER SCOTT A
    Director
    $313,009
    @ $31.30 · 2026-05-01
    GUSTAFSSON PER ANDERS
    Director
    $1.00M
    @ $38.33 · 2026-03-12
    SILVERNAIL ANDREW K.
    Chief Executive Officer
    $2.00M
    @ $39.98 · 2026-01-30
    CONNOR CHRISTOPHER M
    Director
    $1.01M
    @ $40.37 · 2026-01-30
    Open market purchases · includes direct & indirect ownership · excludes option exercises
    MSFT
    0
    Buys (3M)
    1
    Buys (12M)
    Total value (12M): $1.99M
    STANTON JOHN W.
    Director
    $1.99M
    @ $397.35 · 2026-02-18
    SMITH BRADFORD LEE
    President
    $1.45M
    @ $377.47 · 2025-04-23
    Open market purchases · includes direct & indirect ownership · excludes option exercises

    Open market purchases · includes direct & indirect ownership · excludes option exercises.

    Insider Selling Activity

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    IP
    0
    Sells (3M)
    1
    Sells (12M)
    Total value (12M): $409,815
    SAAB JOSEPH R
    General Counsel
    $409,815
    @ $45.53 · 2025-09-16
    GOUGHNOUR HOLLY G
    Officer
    $336,344
    @ $44.85 · 2025-05-05
    SULLIVAN KATHRYN D.
    Director
    $35,034
    @ $58.39 · 2024-11-29
    SULLIVAN KATHRYN D.
    Director
    $33,714
    @ $56.19 · 2024-11-15
    SULLIVAN KATHRYN D.
    Director
    $32,100
    @ $53.50 · 2024-10-31
    SULLIVAN KATHRYN D.
    Director
    $28,848
    @ $48.08 · 2024-10-15
    SULLIVAN KATHRYN D.
    Director
    $29,208
    @ $48.68 · 2024-09-30
    SULLIVAN KATHRYN D.
    Director
    $29,688
    @ $49.48 · 2024-09-16
    SAAB JOSEPH R
    General Counsel
    $115,412
    @ $47.30 · 2024-09-12
    GOUGHNOUR HOLLY G
    Officer
    $236,100
    @ $47.22 · 2024-09-06
    SULLIVAN KATHRYN D.
    Director
    $28,740
    @ $47.90 · 2024-08-30
    ELLIS CLAYTON R
    Officer
    $439,470
    @ $48.83 · 2024-08-28
    SULLIVAN KATHRYN D.
    Director
    $27,660
    @ $46.10 · 2024-08-15
    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives
    MSFT
    4
    Sells (3M)
    10
    Sells (12M)
    Total value (12M): $121.03M
    NUMOTO TAKESHI
    Officer
    $1.81M
    @ $402.84 · 2026-06-10
    NUMOTO TAKESHI
    Officer
    $1.03M
    @ $412.45 · 2026-06-08
    ALTHOFF JUDSON
    Officer
    $7.15M
    @ $460.99 · 2026-06-01
    COLEMAN AMY
    Officer
    $519,242
    @ $411.44 · 2026-05-14
    HOGAN KATHLEEN T
    Officer
    $5.05M
    @ $409.55 · 2026-03-06
    NUMOTO TAKESHI
    Officer
    $1.36M
    @ $478.72 · 2025-12-04
    ALTHOFF JUDSON
    Officer
    $6.27M
    @ $491.52 · 2025-12-02
    SMITH BRADFORD LEE
    President
    $19.97M
    @ $518.64 · 2025-11-03
    NADELLA SATYA
    Chief Executive Officer
    $75.32M
    @ $504.78 · 2025-09-03
    NUMOTO TAKESHI
    Officer
    $2.56M
    @ $527.32 · 2025-08-12
    NUMOTO TAKESHI
    Officer
    $1.39M
    @ $463.00 · 2025-06-03
    NUMOTO TAKESHI
    Officer
    $460,008
    @ $460.01 · 2025-05-30
    HOGAN KATHLEEN T
    Officer
    $9.76M
    @ $453.77 · 2025-05-21
    ALTHOFF JUDSON
    Officer
    $7.33M
    @ $458.18 · 2025-05-19
    COLEMAN AMY
    Officer
    $5.99M
    @ $452.04 · 2025-05-15
    SMITH BRADFORD LEE
    President
    $1.68M
    @ $438.44 · 2025-05-05
    SMITH BRADFORD LEE
    President
    $35.30M
    @ $435.84 · 2025-05-05
    NUMOTO TAKESHI
    Officer
    $1.12M
    @ $447.41 · 2024-12-09
    NUMOTO TAKESHI
    Officer
    $874,634
    @ $437.32 · 2024-12-04
    NUMOTO TAKESHI
    Officer
    $1.50M
    @ $428.76 · 2024-12-02
    ALTHOFF JUDSON
    Officer
    $10.43M
    @ $417.00 · 2024-11-22
    NUMOTO TAKESHI
    Officer
    $414,720
    @ $414.72 · 2024-11-22
    YOUNG CHRISTOPHER DAVID
    Officer
    $3.05M
    @ $423.66 · 2024-11-12
    NUMOTO TAKESHI
    Officer
    $1.03M
    @ $411.04 · 2024-09-10
    HOGAN KATHLEEN T
    Officer
    $7.16M
    @ $411.86 · 2024-09-10
    SMITH BRADFORD LEE
    President
    $16.10M
    @ $402.59 · 2024-09-09
    HOOD AMY E
    Chief Financial Officer
    $15.60M
    @ $410.55 · 2024-09-05
    NADELLA SATYA
    Chief Executive Officer
    $32.02M
    @ $408.63 · 2024-09-04
    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

    Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

    🎭 Mr. Market's Mood

    Learn more →
    IP
    FearGreed
    😐Neutral(43/100)

    "Market is pricing this stock without strong emotion in either direction"

    Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
    MSFT
    FearGreed
    😐Neutral(57/100)

    "Market is pricing this stock without strong emotion in either direction"

    Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

    Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

    ⚖️ Buffett Signal

    Learn more →
    IP
    ⚪Awaiting DCF Data

    The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

    DCF Margin of Safety: N/AMr. Market's Mood: Neutral (43)
    MSFT
    ⚪Awaiting DCF Data

    The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

    DCF Margin of Safety: N/AMr. Market's Mood: Neutral (57)
    View IP Full AnalysisView MSFT Full Analysis

    Frequently Asked Questions: IP vs MSFT

    Is International Paper Company or Microsoft Corporation more undervalued in 2026?▼

    Based on our discounted cash flow model, IP trades at a 100.0% margin of safety (intrinsic value $124527309897 vs. price $41), compared to MSFT's 35.8% margin of safety (intrinsic $724 vs. $465).

    Which stock has a wider economic moat, International Paper Company or Microsoft Corporation?▼

    MSFT scores 84/100 (Wide moat), while IP scores 17/100 (None moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.

    Is International Paper Company in financial distress?▼

    IP's Altman Z-Score of 0.9 places it in the Distress zone, signaling elevated bankruptcy risk. MSFT scores 8.3 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.

    Which stock has higher return on invested capital, International Paper Company or Microsoft Corporation?▼

    MSFT earns 20.7% ROIC versus IP's 1.7%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.

    Which dividend is safer, International Paper Company's or Microsoft Corporation's?▼

    MSFT's dividend earns a safety score of 94/100 (Very Safe), compared to IP's 56/100 (Borderline). MSFT has raised its dividend for 3 consecutive years.

    IP vs MSFT: Which Is the Better Buy in 2026? | SafetyMargin.io