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

Zacks Equity Research

Microsoft (MSFT) closed the most recent trading day at $188.94, moving +0.64% from the previous trading session. This move lagged the S&P 500's daily gain of 0.83%. Elsewhere, the Dow gained 0.62%, while the tech-heavy Nasdaq added 1.43%.

Investors will be hoping for strength from MSFT as it approaches its next earnings release. In that report, analysts expect MSFT to post earnings of $1.40 per share. This would mark year-over-year growth of 2.19%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $36.59 billion, up 8.51% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.70 per share and revenue of $141.55 billion, which would represent changes of +20% and +12.48%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MSFT. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.09% higher. MSFT is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, MSFT is holding a Forward P/E ratio of 32.96. This represents a premium compared to its industry's average Forward P/E of 32.36.

Meanwhile, MSFT's PEG ratio is currently 2.55. 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. The Computer - Software industry currently had an average PEG ratio of 2.65 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 136, which puts it in the bottom 47% 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.

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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