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

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In the latest trading session, Microsoft (MSFT) closed at $272.50, marking a +1.4% move from the previous day. This move outpaced the S&P 500's daily gain of 0.95%. Meanwhile, the Dow gained 0.8%, and the Nasdaq, a tech-heavy index, lost 0.28%.

Prior to today's trading, shares of the software maker had gained 1.58% over the past month. This has outpaced the Computer and Technology sector's loss of 0.21% and the S&P 500's gain of 0.1% in that time.

Wall Street will be looking for positivity from Microsoft as it approaches its next earnings report date. In that report, analysts expect Microsoft to post earnings of $2.32 per share. This would mark year-over-year growth of 6.91%. Meanwhile, our latest consensus estimate is calling for revenue of $52.45 billion, up 13.65% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.30 per share and revenue of $198.69 billion, which would represent changes of +16.69% and +18.21%, respectively, from the prior year.

Any recent changes to analyst estimates for Microsoft should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.24% lower. Microsoft currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Microsoft has a Forward P/E ratio of 28.9 right now. For comparison, its industry has an average Forward P/E of 28.9, which means Microsoft is trading at a no noticeable deviation to the group.

Also, we should mention that MSFT has a PEG ratio of 2.42. 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 2.3 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 98, putting it in the top 39% 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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