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Microsoft (MSFT) Gains As Market Dips: What You Should Know

Zacks Equity Research
Crown (CCK) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Microsoft (MSFT) closed at $106.94 in the latest trading session, marking a +0.07% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.15%. Meanwhile, the Dow lost 0.4%, and the Nasdaq, a tech-heavy index, 0%.

Prior to today's trading, shares of the software maker had lost 0.68% over the past month. This has was narrower than the Computer and Technology sector's loss of 5.26% and the S&P 500's loss of 1.27% in that time.

Investors will be hoping for strength from MSFT as it approaches its next earnings release, which is expected to be January 30, 2019. On that day, MSFT is projected to report earnings of $1.09 per share, which would represent year-over-year growth of 13.54%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.48 billion, up 12.33% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.39 per share and revenue of $123.41 billion. These totals would mark changes of +13.14% and +11.83%, respectively, from last year.

Any recent changes to analyst estimates for MSFT should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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.

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 3.24% higher. MSFT is currently a Zacks Rank #2 (Buy).

Digging into valuation, MSFT currently has a Forward P/E ratio of 24.36. This valuation marks a discount compared to its industry's average Forward P/E of 30.55.

Meanwhile, MSFT's PEG ratio is currently 1.95. 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 2.08 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 82, putting it in the top 32% 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.

To follow MSFT in the coming trading sessions, be sure to utilize Zacks.com.


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