Microsoft (MSFT) closed the most recent trading day at $217.49, moving -0.97% from the previous trading session. This move lagged the S&P 500's daily loss of 0.66%. Meanwhile, the Dow lost 0.29%, and the Nasdaq, a tech-heavy index, lost 1.25%.
Prior to today's trading, shares of the software maker had gained 4.32% over the past month. This has outpaced the Computer and Technology sector's gain of 3.38% and the S&P 500's gain of 3.42% 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 $1.64 per share, which would represent year-over-year growth of 8.61%. Meanwhile, our latest consensus estimate is calling for revenue of $40.12 billion, up 8.72% from the prior-year quarter.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.73 per share and revenue of $157.35 billion. These totals would mark changes of +16.84% and +10.02%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for MSFT. Recent revisions tend to reflect the latest near-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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. The Zacks Consensus EPS estimate has moved 0.03% lower within the past month. MSFT is currently sporting a Zacks Rank of #3 (Hold).
Looking at its valuation, MSFT is holding a Forward P/E ratio of 32.65. Its industry sports an average Forward P/E of 33.58, so we one might conclude that MSFT is trading at a discount comparatively.
We can also see that MSFT currently has a PEG ratio of 2.47. 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. Computer - Software stocks are, on average, holding a PEG ratio of 2.98 based on yesterday's closing prices.
The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 117, which puts it in the top 46% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual 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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