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

Zacks Equity Research
Visa (V) closed at $155.03 in the latest trading session, marking a -0.28% move from the prior day.

In the latest trading session, Microsoft (MSFT) closed at $102.06, marking a +0.13% move from the previous day. This change lagged the S&P 500's 0.7% gain on the day. Elsewhere, the Dow gained 0.42%, while the tech-heavy Nasdaq added 1.26%.

Heading into today, shares of the software maker had lost 6.65% over the past month, lagging the Computer and Technology sector's loss of 4.86% and the S&P 500's loss of 6.13% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. This is expected to be January 30, 2019. The company is expected to report EPS of $1.09, up 13.54% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.46 billion, up 12.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.43 per share and revenue of $124.08 billion, which would represent changes of +14.18% and +12.43%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for MSFT. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Within the past 30 days, our consensus EPS projection has moved 0.12% higher. MSFT is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, MSFT currently has a Forward P/E ratio of 23. This represents a discount compared to its industry's average Forward P/E of 25.7.

We can also see that MSFT currently has a PEG ratio of 1.84. 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 1.85 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 80, which puts it in the top 32% 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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