In the latest market close, Microsoft (MSFT) reached $396.98, with a +1.13% movement compared to the previous day. The stock lagged the S&P 500’s daily gain of 1.59%. On the other hand, the Dow registered a gain of 1.39%, and the technology-centric Nasdaq increased by 1.63%.
Shares of the software maker have depreciated by 5.41% over the course of the past month, underperforming the Computer and Technology sector’s loss of 3.43% and the S&P 500’s loss of 2.42%.
Market participants will be closely following the financial results of Microsoft in its upcoming release. The company’s earnings per share (EPS) are projected to be $3.20, reflecting an 8.84% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $68.37 billion, up 10.52% from the year-ago period.
For the full year, the Zacks Consensus Estimates project earnings of $13.08 per share and a revenue of $276.19 billion, demonstrating changes of +10.85% and +12.67%, respectively, from the preceding year.
Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Microsoft. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 1.47% higher within the past month. Microsoft is holding a Zacks Rank of #3 (Hold) right now.
Valuation is also important, so investors should note that Microsoft has a Forward P/E ratio of 30.01 right now. This indicates a premium in contrast to its industry’s Forward P/E of 27.73.
We can additionally observe that MSFT currently boasts a PEG ratio of 2.08. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. MSFT’s industry had an average PEG ratio of 2.11 as of yesterday’s close.
The Computer – Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 166, positioning it in the bottom 34% of all 250+ industries.
