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Microsoft (MSFT) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Microsoft (MSFT) closed at $139.14, marking a -0.22% move from the previous day. This change lagged the S&P 500's daily loss of 0.01%. At the same time, the Dow added 0.06%, and the tech-heavy Nasdaq lost 0.06%.

Heading into today, shares of the software maker had gained 1.2% over the past month, lagging the Computer and Technology sector's gain of 2.92% and the S&P 500's gain of 3.23% in that time.

Investors will be hoping for strength from MSFT as it approaches its next earnings release. In that report, analysts expect MSFT to post earnings of $1.25 per share. This would mark year-over-year growth of 9.65%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.23 billion, up 10.83% from the year-ago period.

MSFT's full-year Zacks Consensus Estimates are calling for earnings of $5.23 per share and revenue of $139.88 billion. These results would represent year-over-year changes of +10.11% and +11.16%, respectively.

Any recent changes to analyst estimates for MSFT should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.13% higher within the past month. MSFT is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, MSFT is currently trading at a Forward P/E ratio of 26.65. Its industry sports an average Forward P/E of 28.95, so we one might conclude that MSFT is trading at a discount comparatively.

It is also worth noting that MSFT currently has a PEG ratio of 2.42. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 2.04 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 61, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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