Microsoft Reports Upcoming Earnings
The stock market saw a mixed session on Tuesday, with the S&P 500 and the Dow experiencing slight gains while the Nasdaq saw a decrease. Microsoft (MSFT) closed at $370.87, reflecting a -1.37% shift from the previous trading day’s closing. The stock has risen by 1.87% in the past month, lagging behind the Computer and Technology sectors’ gain of 4.46% and the S&P 500’s gain of 4%. The upcoming earnings release of Microsoft will be of great interest to investors, with the company predicted to post an EPS of $2.75, indicating an 18.53% growth compared to the equivalent quarter last year. The Zacks Consensus Estimate for revenue is projecting net sales of $61.02 billion, up 15.69% from the year-ago period. 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.
Recent revisions to analyst estimates for Microsoft reflect the latest near-term business trends, with upward revisions expressing analysts’ positivity towards the company’s business operations and its ability to generate profits. The Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system, has established an impressive track record of exceeding expectations, with stocks at #1 delivering an average annual return of +25% since 1988. As of now, Microsoft holds a Zacks Rank of #2 (Buy).
In terms of valuation, Microsoft is currently trading with a Forward PE ratio of 33.79, marking a premium compared to its industry’s average Forward PE of 32.56. The company also boasts a PEG ratio of 2.5, which accounts for its projected earnings growth. The Computer – Software industry, of which Microsoft is a part, holds a PEG ratio of 2.52 based on yesterday’s closing prices. With its current Zacks Industry Rank of 161, this industry ranks in the bottom 37% of all industries, numbering over 250.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Microsoft’s upcoming earnings release and recent revisions to analyst estimates make it an interesting company to watch.
