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

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Microsoft (MSFT) closed the most recent trading day at $264.55, moving -1.16% from the previous trading session. This change lagged the S&P 500's daily loss of 1.15%. Meanwhile, the Dow lost 0.52%, and the Nasdaq, a tech-heavy index, lost 0.34%.

Prior to today's trading, shares of the software maker had gained 5.8% over the past month. This has outpaced the Computer and Technology sector's loss of 4.74% and the S&P 500's loss of 5.08% in that time.

Microsoft will be looking to display strength as it nears its next earnings release. In that report, analysts expect Microsoft to post earnings of $2.29 per share. This would mark year-over-year growth of 5.53%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $52.32 billion, up 13.37% from the year-ago period.

It is also important to note the recent changes to analyst estimates for Microsoft. These recent revisions tend to reflect the evolving nature of short-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. 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, 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 0.35% lower. Microsoft is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Microsoft is currently trading at a Forward P/E ratio of 25.33. This represents a no noticeable deviation compared to its industry's average Forward P/E of 25.33.

It is also worth noting that MSFT currently has a PEG ratio of 2.2. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Software industry currently had an average PEG ratio of 2.25 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 148, putting it in the bottom 42% 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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