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

Zacks Equity Research

In the latest trading session, Microsoft (MSFT) closed at $163.28, marking a +1.2% move from the previous day. This move outpaced the S&P 500's daily gain of 0.7%. Meanwhile, the Dow gained 0.29%, and the Nasdaq, a tech-heavy index, added 1.04%.

Coming into today, shares of the software maker had gained 5.29% in the past month. In that same time, the Computer and Technology sector gained 7.4%, while the S&P 500 gained 4.38%.

MSFT will be looking to display strength as it nears its next earnings release. On that day, MSFT is projected to report earnings of $1.32 per share, which would represent year-over-year growth of 20%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $35.69 billion, up 9.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.36 per share and revenue of $140.10 billion, which would represent changes of +12.84% and +11.33%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MSFT. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 remained stagnant. MSFT is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, MSFT is currently trading at a Forward P/E ratio of 30.11. This represents a discount compared to its industry's average Forward P/E of 32.93.

Meanwhile, MSFT's PEG ratio is currently 2.53. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Software was holding an average PEG ratio of 2.21 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 88, which puts it in the top 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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