In the latest market close, Microsoft (MSFT) reached $448.99, with a +1.28% movement compared to the previous day. The stock outpaced the S&P 500’s daily gain of 0.82%. On the other hand, the Dow registered a loss of 0.22%, and the technology-centric Nasdaq increased by 1.77%.
The software maker’s shares have seen an increase of 4.8% over the last month, surpassing the Computer and Technology sector’s gain of 1.43% and the S&P 500’s gain of 0.8%.
The upcoming earnings release of Microsoft will be of great interest to investors. The company is predicted to post an EPS of $3.14, indicating a 7.17% growth compared to the equivalent quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $68.75 billion, showing a 10.86% escalation compared to the year-ago quarter.
For the annual period, the Zacks Consensus Estimates anticipate earnings of $12.93 per share and a revenue of $277.69 billion, signifying shifts of +9.58% and +13.29%, respectively, from the last year.
Any recent changes to analyst estimates for Microsoft should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts’ confidence in the company’s business performance and profit potential.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, there’s been a 0.1% fall in the Zacks Consensus EPS estimate. Microsoft is currently a Zacks Rank #3 (Hold).
In terms of valuation, Microsoft is presently being traded at a Forward P/E ratio of 34.29. For comparison, its industry has an average Forward P/E of 32.41, which means Microsoft is trading at a premium to the group.
Also, we should mention that MSFT has a PEG ratio of 2.35. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company’s anticipated earnings growth rate. As of the close of trade yesterday, the Computer – Software industry held an average PEG ratio of 2.38.
The Computer – Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 78, placing it within the top 32% of over 250 industries.
