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

Microsoft (MSFT) closed at $171.42 in the latest trading session, marking a -1.21% move from the prior day. This move lagged the S&P 500's daily loss of 0.05%. Meanwhile, the Dow gained 0.17%, and the Nasdaq, a tech-heavy index, lost 0.01%.

Prior to today's trading, shares of the software maker had gained 18.1% over the past month. This has lagged the Computer and Technology sector's gain of 21.05% and the S&P 500's gain of 21.82% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. This is expected to be April 29, 2020. On that day, MSFT is projected to report earnings of $1.27 per share, which would represent year-over-year growth of 11.4%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $33.85 billion, up 10.71% from the year-ago period.

MSFT's full-year Zacks Consensus Estimates are calling for earnings of $5.55 per share and revenue of $140.49 billion. These results would represent year-over-year changes of +16.84% and +11.64%, respectively.

Investors should also note any recent changes to analyst estimates for MSFT. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 1.36% lower within the past month. MSFT is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, MSFT currently has a Forward P/E ratio of 31.25. Its industry sports an average Forward P/E of 28.32, so we one might conclude that MSFT is trading at a premium comparatively.

Meanwhile, MSFT's PEG ratio is currently 2.43. 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 industry currently had an average PEG ratio of 2.58 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 48, which puts 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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