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

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Microsoft (MSFT) closed the most recent trading day at $247.65, moving +1.09% from the previous trading session. This change outpaced the S&P 500's 0.22% gain on the day. Meanwhile, the Dow lost 0.13%, and the Nasdaq, a tech-heavy index, added 0.22%.

Coming into today, shares of the software maker had lost 1.94% in the past month. In that same time, the Computer and Technology sector lost 9.55%, while the S&P 500 lost 10.02%.

Investors will be hoping for strength from Microsoft as it approaches its next earnings release. In that report, analysts expect Microsoft to post earnings of $2.30 per share. This would mark year-over-year growth of 5.99%. Meanwhile, our latest consensus estimate is calling for revenue of $52.38 billion, up 13.5% from the prior-year quarter.

MSFT's full-year Zacks Consensus Estimates are calling for earnings of $9.28 per share and revenue of $198.53 billion. These results would represent year-over-year changes of +16.44% and +18.11%, respectively.

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

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.5% lower. Microsoft is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, Microsoft is holding a Forward P/E ratio of 26.7. This represents a premium compared to its industry's average Forward P/E of 25.9.

Investors should also note that MSFT has a PEG ratio of 2.23 right now. 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 was holding an average PEG ratio of 2.11 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 146, putting it in the bottom 43% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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