Microsoft (MSFT) closed the most recent trading day at $509.87, moving +1.77% from the previous trading session. The stock outperformed the S&P 500, which registered a daily loss of 0.05%. On the other hand, the Dow registered a loss of 0.59%, and the technology-centric Nasdaq increased by 0.45%.
Prior to today's trading, shares of the software maker had lost 4.11% lagged the Computer and Technology sector's gain of 5.42% and the S&P 500's gain of 3.44%.
Market participants will be closely following the financial results of Microsoft in its upcoming release. It is anticipated that the company will report an EPS of $3.65, marking a 10.61% rise compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $75.37 billion, reflecting a 14.93% rise from the equivalent quarter last year.
For the full year, the Zacks Consensus Estimates are projecting earnings of $15.35 per share and revenue of $321.16 billion, which would represent changes of +12.54% and +14%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Microsoft. Such recent modifications usually signify the changing landscape of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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. Over the past month, there's been a 0.13% rise in the Zacks Consensus EPS estimate. Microsoft is currently sporting a Zacks Rank of #2 (Buy).
Valuation is also important, so investors should note that Microsoft has a Forward P/E ratio of 32.65 right now. This expresses a premium compared to the average Forward P/E of 27.63 of its industry.
Meanwhile, MSFT's PEG ratio is currently 2.19. 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. By the end of yesterday's trading, the Computer - Software industry had an average PEG ratio of 2.05.
The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 88, putting it in the top 36% of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
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Microsoft Corporation (MSFT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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