Microsoft Corporation (MSFT) vs State Street Corporation (STT): Which Is the Better Buy in 2026?
As of 2026-06-19, MSFT is fairly valued at $379, with a DCF intrinsic value of $440 and a margin of safety of 14%. STT is undervalued at $168, with an intrinsic value of $272 and a margin of safety of 38%. Of the two, STT has the wider margin of safety.
Rewards
- ★Microsoft Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 68.3% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Microsoft Corporation scores 88/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★State Street Corporation scores 74/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★Share count has been reduced by 20% over the past 4 years through buybacks, increasing each share's claim on earnings.
Risks
- ⚠FCF yield of 2.5% 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.
- ⚠Gross margin of 0.0% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠Trailing P/E of 17.1x is 38% above the historical average of 12.4x — the stock trades at a premium to its own history.
- ⚠Altman Z-Score of 0.22 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →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.
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
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $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
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $379?
The market implies +12.4% Owner Earnings growth, roughly in line with history — reasonably priced.
Standard FCF implies +17.1%, reflecting ongoing growth investment.
Requires positive FCF to compute implied growth rate.
Economic Moat Score
Learn more →Wide moat driven primarily by revenue predictability. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Wide moat driven primarily by revenue predictability. Margin Stability is the area most vulnerable to competitive pressure.
Forensic Accounting
Learn more →M-Score Trend
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.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pessimistic — investigate whether fears are temporary or structural"
"Market is optimistic — be cautious and ensure you have a margin of safety"
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 →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: MSFT vs STT
Is Microsoft Corporation or State Street Corporation more undervalued in 2026?▼
Based on our discounted cash flow model, STT trades at a 38.1% margin of safety (intrinsic value $272 vs. price $168), compared to MSFT's 13.7% margin of safety (intrinsic $440 vs. $379).
Which stock has a wider economic moat, Microsoft Corporation or State Street Corporation?▼
MSFT scores 88/100 (Wide moat), while STT scores 74/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is State Street Corporation in financial distress?▼
STT's Altman Z-Score of 0.2 places it in the Distress zone, signaling elevated bankruptcy risk. MSFT scores 9.6 (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 dividend is safer, Microsoft Corporation's or State Street Corporation's?▼
STT's dividend earns a safety score of 94/100 (Very Safe), compared to MSFT's 94/100 (Very Safe). STT has raised its dividend for 3 consecutive years.