Microsoft (MSFT) closed at $435.25 in the latest trading session, marking a -0.31% move from the prior day. The stock trailed the S&P 500, which registered a daily gain of 0.73%. Meanwhile, the Dow experienced a rise of 0.16%, and the technology-dominated Nasdaq saw an increase of 0.98%.
Prior to today’s trading, shares of the software maker had gained 4.7% over the past month. This has outpaced the Computer and Technology sector’s gain of 3.28% and the S&P 500’s gain of 0.34% in that time.
The upcoming earnings release of Microsoft will be of great interest to investors. In that report, analysts expect Microsoft to post earnings of $3.14 per share. This would mark year-over-year growth of 7.17%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $68.75 billion, up 10.86% from the year-ago period.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $12.93 per share and revenue of $277.69 billion, indicating changes of +9.58% and +13.29%, respectively, compared to the previous year.
Investors should also take note of any recent adjustments to analyst estimates for Microsoft. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To exploit this, we’ve formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Microsoft currently has a Zacks Rank of #3 (Hold).
Investors should also note Microsoft’s current valuation metrics, including its Forward P/E ratio of 33.76. This valuation marks a premium compared to its industry’s average Forward P/E of 31.48.
It’s also important to note that MSFT currently trades at a PEG ratio of 2.32. 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. The Computer – Software was holding an average PEG ratio of 2.32 at yesterday’s closing price.
The Computer – Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 75, positioning it in the top 30% of all 250+ industries.
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