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

Zacks Equity Research
Match Group (MTCH) closed at $76.79 in the latest trading session, marking a +1.01% move from the prior day.

Microsoft (MSFT) closed at $132.02 in the latest trading session, marking a -0.44% move from the prior day. This move lagged the S&P 500's daily loss of 0.04%. Elsewhere, the Dow lost 0.05%, while the tech-heavy Nasdaq lost 0.01%.

Heading into today, shares of the software maker had gained 7.5% over the past month, outpacing the Computer and Technology sector's loss of 1.99% and the S&P 500's gain of 0.34% in that time.

MSFT will be looking to display strength as it nears its next earnings release. On that day, MSFT is projected to report earnings of $1.21 per share, which would represent year-over-year growth of 7.08%. Our most recent consensus estimate is calling for quarterly revenue of $32.72 billion, up 8.76% from the year-ago period.

MSFT's full-year Zacks Consensus Estimates are calling for earnings of $4.58 per share and revenue of $124.84 billion. These results would represent year-over-year changes of +18.04% and +13.12%, respectively.

Investors might also notice recent changes to analyst estimates for MSFT. 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. 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.

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 remained stagnant within the past month. MSFT is currently a Zacks Rank #2 (Buy).

In terms of valuation, MSFT is currently trading at a Forward P/E ratio of 28.92. This valuation marks a discount compared to its industry's average Forward P/E of 29.83.

It is also worth noting that MSFT currently has a PEG ratio of 2.33. 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 was holding an average PEG ratio of 2.19 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 157, which puts it in the bottom 39% 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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