U.S. Markets close in 4 hrs 2 mins

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

Zacks Equity Research

Microsoft (MSFT) closed at $139.03 in the latest trading session, marking a +0.94% move from the prior day. This change outpaced the S&P 500's 0.51% gain on the day. At the same time, the Dow added 0.36%, and the tech-heavy Nasdaq gained 0.75%.

Heading into today, shares of the software maker had lost 0.28% over the past month, lagging the Computer and Technology sector's gain of 2.59% and the S&P 500's gain of 3.44% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. On that day, MSFT is projected to report earnings of $1.21 per share, which would represent year-over-year growth of 6.14%. Our most recent consensus estimate is calling for quarterly revenue of $32.23 billion, up 10.83% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.23 per share and revenue of $139.88 billion, which would represent changes of +10.11% and +11.16%, 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. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

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 0.13% higher. MSFT is currently a Zacks Rank #2 (Buy).

Looking at its valuation, MSFT is holding a Forward P/E ratio of 26.33. Its industry sports an average Forward P/E of 27.16, so we one might conclude that MSFT is trading at a discount comparatively.

We can also see that MSFT currently has a PEG ratio of 2.39. 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. The Computer - Software industry currently had an average PEG ratio of 2.16 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 91, putting it in the top 36% 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.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.