Microsoft (MSFT) closed the most recent trading day at $208.35, moving +0.62% from the previous trading session. This change lagged the S&P 500's 1.34% gain on the day. Meanwhile, the Dow gained 2.13%, and the Nasdaq, a tech-heavy index, added 0.94%.
Prior to today's trading, shares of the software maker had gained 9.6% over the past month. This has outpaced the Computer and Technology sector's gain of 7.45% and the S&P 500's gain of 3.92% in that time.
Investors will be hoping for strength from MSFT as it approaches its next earnings release, which is expected to be July 22, 2020. The company is expected to report EPS of $1.40, up 2.19% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $36.59 billion, up 8.51% from the year-ago period.
Any recent changes to analyst estimates for MSFT should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.23% higher. MSFT currently has a Zacks Rank of #3 (Hold).
Investors should also note MSFT's current valuation metrics, including its Forward P/E ratio of 33.2. For comparison, its industry has an average Forward P/E of 30.91, which means MSFT is trading at a premium to the group.
We can also see that MSFT currently has a PEG ratio of 2.38. 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. MSFT's industry had an average PEG ratio of 2.83 as of yesterday's close.
The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 105, putting it in the top 42% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual 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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.