Microsoft Corporation (NASDAQ:MSFT) stock has fallen off after reporting blowout earnings numbers. The company supports one of the most solid balance sheets in corporate America. Moreover, MSFT stock has returned to prominence after the decline in the PC market.

However, with an increasing stock price and higher valuations, now may not be the right time for an investment in MSFT stock.

MSFT Sold off Despite Beating Estimates

In a recent article, I described MSFT stock as an equity that has “leveled out.” My instinct appears to be coming to pass. In the Jan. 31 earnings report, MSFT beat earnings as it reported a profit of 96 cents per share on revenues of $28.92 billion.

Profits rose 12% from the same quarter last year. The Productivity and Business Segment, which includes Office 365 and LinkedIn, and its Intelligent Cloud segment, which produces Microsoft Azure were responsible for the increases.

Its Personal Computing segment remains the company’s largest segment. However, as consumers rely less on PCs, growth in one-time profit drive Windows remains scant.

Admittedly, one has to dig deep to find negatives about today’s Microsoft. Since Satya Nadella became CEO, the company has remade itself. When Nadella took over Microsoft, the market perceived them as reliant on outdated technology.

Today, the company has proven to the market that it can thrive without reliance on Windows monopoly.

Few Companies Rival MSFT on Financial Stability

Nadella has greatly strengthened Microsoft’s financials. Today the company holds almost $143 billion in cash on its balance a sheet, a cash hoard second only to Apple Inc. (NASDAQ:AAPL) in size.

Moreover, Microsoft, along with Johnson & Johnson (NYSE:JNJ), remain the only companies to hold the coveted AAA credit rating.

Also, this company that once scoffed at the idea of cash payouts now has embraced its role as a dividend-paying stock. Except for 2009, the company has increased quarterly payouts every year since introducing its dividend in 2003.

Its annual dividend now stands at $1.68 per share, which places the yield at about 1.7%. While that amounts to an average payout in today’s S&P 500, it’s near to the split-adjusted price of MSFT stock in 1993.

Valuations on MSFT Have Risen

Ironically, it’s these impressive financials that have caused the problem for MSFT stock. The company’s stock price rose 40% over the last 12 months and nearly doubled over the last 18 months. That’s an excellent return for its long-time investors.

But as a result, the consensus forward price-to-earnings (PE) ratio stands at just under 28, a high PE for its type.

Its type could today be considered “old tech.” By “old tech,” I mean in the same league as International Business Machines Corp. (NYSE:IBM) or its long-time PC partner Intel Corporation (NASDAQ:INTC).

The days where MSFT could command three-digit PE ratios like Amazon.com, Inc. (NASDAQ:AMZN) or Netflix, Inc. (NASDAQ:NFLX) remain behind them.

Today, MSFT has evolved into a venerable American corporation whose stock is attractive to conservative and income-oriented investors. That group tends to shy away from PE ratios exceeding the S&P 500 average, which currently stands at about 26.

The Bottom Line on MSFT Stock

Despite being arguably the most financially solid company in the world, MSFT is not a buy, at least at this time. One good write a book on the virtues of Microsoft. After all, who doesn’t want 12% profit growth, a AAA credit rating and a $143 billion cash hoard?

Now, the Microsoft stock price has nearly doubled in the last 18 months. This run-up has been a boon to long-time investors.

However, it also brought the stock to a more expensive valuation. Given the valuation and the reaction to impressive earnings number, I’m holding to my “watch but don’t buy” rating on MSFT.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.