Microsoft (MSFT) closed the most recent trading day at $478.87, moving +1.32% from the previous trading session. The stock outperformed the S&P 500, which registered a daily gain of 0.38%. At the same time, the Dow added 0.24%, and the tech-heavy Nasdaq gained 0.24%.
Prior to today’s trading, shares of the software maker had gained 4.34% lagged the Computer and Technology sector’s gain of 11.61% and the S&P 500’s gain of 6.6%.
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Analysts and investors alike will be keeping a close eye on the performance of Microsoft in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $3.35, marking a 13.56% rise compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $73.71 billion, up 13.88% from the year-ago period.
For the full year, the Zacks Consensus Estimates project earnings of $13.33 per share and a revenue of $278.8 billion, demonstrating changes of +12.97% and +13.74%, respectively, from the preceding year.
Investors should also pay attention to any latest changes in analyst estimates for Microsoft. These revisions typically reflect the latest short-term business trends, which can change frequently. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To capitalize on this, we’ve crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, there’s been a 0.25% rise in the Zacks Consensus EPS estimate. Microsoft currently has a Zacks Rank of #3 (Hold).
In the context of valuation, Microsoft is at present trading with a Forward P/E ratio of 35.44. This represents a premium compared to its industry average Forward P/E of 28.15.
Also, we should mention that MSFT has a PEG ratio of 2.4. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. The Computer – Software industry had an average PEG ratio of 2.4 as trading concluded yesterday.
The Computer – Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 30, placing it within the top 13% of over 250 industries.
