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

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In the latest trading session, Microsoft (MSFT) closed at $300.19, marking a +1.78% move from the previous day. This change lagged the S&P 500's 1.86% gain on the day. At the same time, the Dow added 1.79%, and the tech-heavy Nasdaq gained 0.4%.

Coming into today, shares of the software maker had lost 4.47% in the past month. In that same time, the Computer and Technology sector lost 7.07%, while the S&P 500 lost 5.05%.

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 $2.18 per share, which would represent year-over-year growth of 11.79%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $49 billion, up 17.48% from the year-ago period.

MSFT's full-year Zacks Consensus Estimates are calling for earnings of $9.22 per share and revenue of $198.21 billion. These results would represent year-over-year changes of +15.68% and +17.92%, respectively.

Investors might also notice recent changes to analyst estimates for Microsoft. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 has moved 0.03% higher within the past month. Microsoft is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Microsoft is currently trading at a Forward P/E ratio of 32. For comparison, its industry has an average Forward P/E of 30.9, which means Microsoft is trading at a premium to the group.

Meanwhile, MSFT's PEG ratio is currently 2.56. 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 2.59 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 164, putting it in the bottom 36% 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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