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

·3 min read

Microsoft (MSFT) closed at $253.25 in the latest trading session, marking a -1.1% move from the prior day. This change lagged the S&P 500's 0.41% loss on the day.

Prior to today's trading, shares of the software maker had lost 8.65% over the past month. This has was narrower than the Computer and Technology sector's loss of 9.08% and lagged the S&P 500's loss of 5.13% in that time.

Wall Street will be looking for positivity from Microsoft as it approaches its next earnings report date. The company is expected to report EPS of $2.31, up 1.76% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $49.72 billion, up 9.72% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.09 per share and revenue of $219.94 billion, which would represent changes of +9.55% and +10.93%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Microsoft. 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.

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 0.01% higher. Microsoft is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that Microsoft has a Forward P/E ratio of 25.38 right now. This represents a discount compared to its industry's average Forward P/E of 26.55.

Investors should also note that MSFT has a PEG ratio of 2.17 right now. 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 2.02 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 147, which puts it in the bottom 42% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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