In the latest trading session, Microsoft (MSFT) closed at $407.72, moving +0.06% from previous closing price. The stock outperformed the S&P 500, which fell 0.17% on the day. Meanwhile, the Dow Jones Industrial Average fell 0.06%, and the tech-heavy Nasdaq fell 0.55%.
Shares of the software maker have lost 0.27% over the past month, lagging the Computer Technology sector’s gain of 2.65% and the S&P 500’s gain of 3.98%.
Market participants will be closely monitoring Microsoft’s financial results in future releases. The company’s EPS is expected to be $2.84, representing a year-over-year increase of 15.92%. Meanwhile, our current consensus estimate is projecting revenue of $60.66 billion, representing growth of 14.76% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $11.63 per share and revenue of $243.69 billion, which would represent changes of +18.55% and +14.99% from the prior year.
Investors should also note any recent changes to analyst estimates for Microsoft. These revisions help illustrate the ever-changing 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 shows that these estimate revisions are directly correlated with near-term stock price momentum. To benefit from this, we have created the Zacks Rank, a proprietary model that incorporates these estimate changes to provide an actionable rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), has an impressive, outside-audited history of outperformance, with #1 stocks having an average annual +25% profit. The Zacks Consensus EPS estimate for the month has moved 4.34% higher. Microsoft currently sports a Zacks Rank #2 (Buy).
Looking at valuation, Microsoft is currently trading at a Forward P/E ratio of 35.04. This valuation represents a premium compared to the industry average forward P/E of 31.2.
We also note that MSFT’s current PEG ratio is 2.17. The PEG ratio is similar to the commonly used P/E ratio, but this metric also incorporates a company’s expected earnings growth rate. Based on yesterday’s closing price, Computer-Software stocks are holding an average He PEG ratio of 2.37.
The computer-software industry is part of the computer and technology sector. This group has a Zacks Industry Rank of 64, which puts it in the top 26% of all 250+ industries.
The Zacks Industry Rank is ordered from highest to lowest based on the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.
To follow MSFT in upcoming trading sessions, be sure to visit Zacks.com.
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