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Microsoft (MSFT) Gains But Lags Market: What You Should Know

·3 min read

Microsoft (MSFT) closed at $266.65 in the latest trading session, marking a +0.83% move from the prior day. This move lagged the S&P 500's daily gain of 1.06%. Meanwhile, the Dow gained 0.71%, and the Nasdaq, a tech-heavy index, added 0.09%.

Heading into today, shares of the software maker had lost 9.4% over the past month, lagging the Computer and Technology sector's loss of 4.33% and the S&P 500's loss of 1.14% in that time.

Investors will be hoping for strength from Microsoft as it approaches its next earnings release. On that day, Microsoft is projected to report earnings of $2.31 per share, which would represent year-over-year growth of 1.76%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $49.72 billion, up 9.72% from the year-ago period.

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 might also notice recent changes to analyst estimates for Microsoft. 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. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Microsoft currently has a Zacks Rank of #3 (Hold).

Investors should also note Microsoft's current valuation metrics, including its Forward P/E ratio of 26.22. For comparison, its industry has an average Forward P/E of 27.71, which means Microsoft is trading at a discount to the group.

Also, we should mention that MSFT has a PEG ratio of 2.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.1 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 167, which puts it in the bottom 34% 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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