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

Zacks Equity Research

Microsoft (MSFT) closed the most recent trading day at $137.12, moving -0.72% from the previous trading session. This change lagged the S&P 500's 0.45% loss on the day. Meanwhile, the Dow lost 0.36%, and the Nasdaq, a tech-heavy index, lost 0.33%.

Prior to today's trading, shares of the software maker had lost 1.38% over the past month. This has lagged the Computer and Technology sector's gain of 1.8% and the S&P 500's gain of 0.59% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. On that day, MSFT is projected to report earnings of $1.25 per share, which would represent year-over-year growth of 9.65%. Our most recent consensus estimate is calling for quarterly revenue of $32.23 billion, up 10.83% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.23 per share and revenue of $139.88 billion, which would represent changes of +10.11% and +11.16%, respectively, from the prior year.

Any recent changes to analyst estimates for MSFT should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.13% higher. MSFT is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, MSFT is currently trading at a Forward P/E ratio of 26.4. This represents a discount compared to its industry's average Forward P/E of 27.2.

Also, we should mention that MSFT has a PEG ratio of 2.4. 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 2.16 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 46, putting it in the top 19% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MSFT in the coming trading sessions, be sure to utilize Zacks.com.


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