Microsoft (MSFT) Laps the Stock Market: Here's Why
The most recent trading session ended with Microsoft (MSFT) standing at $372.65, reflecting a +0.52% shift from the previouse trading day's closing. The stock exceeded the S&P 500, which registered a gain of 0.45% for the day.
The investment community will be closely monitoring the performance of Microsoft in its forthcoming earnings report. On that day, Microsoft is projected to report earnings of $2.75 per share, which would represent year-over-year growth of 18.53%. Meanwhile, our latest consensus estimate is calling for revenue of $61.02 billion, up 15.69% from the prior-year quarter.
In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $11.13 per share and a revenue of $242.31 billion, indicating changes of +13.46% and +14.34%, respectively, from the former year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Microsoft. Such recent modifications usually signify the changing landscape of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.
Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. 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, 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 last 30 days, the Zacks Consensus EPS estimate has moved 0.02% higher. At present, Microsoft boasts a Zacks Rank of #3 (Hold).
In terms of valuation, Microsoft is currently trading at a Forward P/E ratio of 33.31. This denotes a premium relative to the industry's average Forward P/E of 32.2.
Meanwhile, MSFT's PEG ratio is currently 2.47. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 2.44 as of yesterday's close.
The Computer - Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 79, positioning it in the top 32% of all 250+ industries.
The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.
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