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Microsoft (MSFT) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Microsoft (MSFT) closed the most recent trading day at $138.12, moving +1.89% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.27%. At the same time, the Dow added 1.25%, and the tech-heavy Nasdaq gained 1.48%.

Prior to today's trading, shares of the software maker had lost 0.52% over the past month. This has was narrower than the Computer and Technology sector's loss of 6.31% and the S&P 500's loss of 4.37% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. The company is expected to report EPS of $1.24, up 8.77% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $32.21 billion, up 10.76% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.22 per share and revenue of $139.76 billion, which would represent changes of +9.89% and +11.06%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MSFT. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.32% higher. MSFT is holding a Zacks Rank of #2 (Buy) right now.

Digging into valuation, MSFT currently has a Forward P/E ratio of 25.95. This valuation marks a discount compared to its industry's average Forward P/E of 29.82.

Meanwhile, MSFT's PEG ratio is currently 2.36. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MSFT's industry had an average PEG ratio of 1.95 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 53, putting it in the top 21% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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