) is set to report fourth-quarter fiscal 2014 results on Jul 22.
Last quarter, the company posted a 9.7% positive surprise. Let's
see how things are shaping up for this announcement.
Factors to Consider this Past Quarter
Microsoft's third-quarter earnings of 68 cents beat the Zacks
Consensus Estimate by 6 cents due to better gross margins and solid
expense management. However, revenues of $20.40 billion were down
Gross margins expanded sequentially due to the change in sales
mix, which favored higher-margin products.
In the last quarter, the consumer side of the business was
weaker, with the company seeing growth in tablets. We believe the
company's recent restructuring, which includes trimming its
workforce, will help Microsoft combat losses due to the persistent
decline in worldwide PC sales and lower operating expenses.
Our proven model does not conclusively show that Microsoft will
beat earnings this quarter. That is because a stock needs to have
both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
Both the Most Accurate estimate and the Zacks Consensus Estimate
stand at 60 cents. Hence, the difference is 0.00%.
Microsoft's Zacks Rank #3 (Hold) when combined with a 0.00% ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
You could consider other stocks with a positive Earnings ESP and
a Zacks Rank #1, 2 or 3 such as:
), with an Earnings ESP of +2.08% and a Zacks Rank #1 (Strong
), with an Earnings ESP of +3.08% and a Zacks Rank #1.
), with an Earnings ESP of +3.13% and a Zacks Rank #2 (Buy).
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