Microsoft (MSFT) ended the recent trading session at $492.05, demonstrating a -1.08% change from the preceding day's closing price. The stock fell short of the S&P 500, which registered a loss of 0.11% for the day. Elsewhere, the Dow saw an upswing of 0.91%, while the tech-heavy Nasdaq depreciated by 0.82%.
Shares of the software maker have appreciated by 7.67% over the course of the past month, underperforming the Computer and Technology sector's gain of 8.76%, and outperforming the S&P 500's gain of 5.17%.
The upcoming earnings release of Microsoft will be of great interest to investors. On that day, Microsoft is projected to report earnings of $3.35 per share, which would represent year-over-year growth of 13.56%. Meanwhile, our latest consensus estimate is calling for revenue of $73.71 billion, up 13.88% from the prior-year quarter.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $13.36 per share and revenue of $279.09 billion, indicating changes of +13.22% and 0%, respectively, compared to the previous year.
It is also important to note the recent changes to analyst estimates for Microsoft. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Currently, Microsoft is carrying a Zacks Rank of #2 (Buy).
Looking at its valuation, Microsoft is holding a Forward P/E ratio of 37.24. Its industry sports an average Forward P/E of 26.66, so one might conclude that Microsoft is trading at a premium comparatively.
Investors should also note that MSFT has a PEG ratio of 2.52 right now. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. By the end of yesterday's trading, the Computer - Software industry had an average PEG ratio of 2.47.
The Computer - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 38, this industry ranks in the top 16% of all industries, numbering over 250.
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.
Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding 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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