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Microsoft (MSFT) Dips More Than Broader Markets: What You Should Know

In the latest trading session, Microsoft (MSFT) closed at $258.36, marking a -0.59% move from the previous day. This change lagged the S&P 500's 0.2% loss on the day.

Heading into today, shares of the software maker had gained 6% over the past month, lagging the Computer and Technology sector's gain of 7.19% and outpacing the S&P 500's gain of 2.11% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. The company is expected to report EPS of $1.90, up 30.14% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $44.07 billion, up 15.87% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.80 per share and revenue of $166.01 billion, which would represent changes of +35.42% and +16.08%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for MSFT. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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. The Zacks Consensus EPS estimate has moved 0.01% higher within the past month. MSFT is currently a Zacks Rank #3 (Hold).

Investors should also note MSFT's current valuation metrics, including its Forward P/E ratio of 33.33. For comparison, its industry has an average Forward P/E of 37.31, which means MSFT is trading at a discount to the group.

We can also see that MSFT currently has a PEG ratio of 2.57. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Software was holding an average PEG ratio of 2.57 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 186, putting it in the bottom 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

To follow MSFT in the coming trading sessions, be sure to utilize Zacks.com.


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