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

Zacks Equity Research
·3 min read

Microsoft (MSFT) closed at $214.93 in the latest trading session, marking a -1.18% move from the prior day. This move lagged the S&P 500's daily gain of 0.04%. Elsewhere, the Dow gained 0.19%, while the tech-heavy Nasdaq added 0.28%.

Coming into today, shares of the software maker had gained 1.54% in the past month. In that same time, the Computer and Technology sector gained 4.2%, while the S&P 500 gained 3.84%.

Investors will be hoping for strength from MSFT as it approaches its next earnings release. The company is expected to report EPS of $1.64, up 8.61% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $40.12 billion, up 8.72% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.73 per share and revenue of $157.35 billion. These totals would mark changes of +16.84% and +10.02%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for MSFT. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.03% lower. MSFT is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, MSFT currently has a Forward P/E ratio of 32.33. For comparison, its industry has an average Forward P/E of 32.33, which means MSFT is trading at a no noticeable deviation to the group.

Meanwhile, MSFT's PEG ratio is currently 2.45. 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. MSFT's industry had an average PEG ratio of 2.98 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 172, which puts it in the bottom 33% 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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Zacks Investment Research