Microsoft (MSFT) closed at $501.61 in the latest trading session, marking a +1.59% move from the prior day. The stock outpaced the S&P 500’s daily gain of 1.49%. On the other hand, the Dow registered a gain of 0.71%, and the technology-centric Nasdaq increased by 2.26%.
Coming into today, shares of the software maker had gained 2.18% in the past month. In that same time, the Computer and Technology sector gained 2.97%, while the S&P 500 gained 0.1%.
The upcoming earnings release of Microsoft will be of great interest to investors. The company is forecasted to report an EPS of $4.69, showcasing a 13.56% upward movement from the corresponding quarter of the prior year. Simultaneously, our latest consensus estimate expects the revenue to be $90.6 billion, showing a 16.65% escalation compared to the year-ago quarter.
For the full year, the Zacks Consensus Estimates are projecting earnings of $19.62 per share and revenue of $389.42 billion, which would represent changes of +9.3% and +17.35%, respectively, from the prior year.
Investors should also pay attention to any latest changes in analyst estimates for Microsoft. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
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, 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 last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.01% increase. Currently, Microsoft is carrying a Zacks Rank of #3 (Hold).
In the context of valuation, Microsoft is at present trading with a Forward P/E ratio of 25.17. This denotes a premium relative to the industry average Forward P/E of 15.98.
We can additionally observe that MSFT currently boasts a PEG ratio of 1.59. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company’s anticipated earnings growth rate. MSFT’s industry had an average PEG ratio of 1.48 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 160, which puts it in the bottom 35% of all 250+ industries.