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Microsoft (MSFT) Stock Slips 1.4% Ahead of Q1 Earnings: What to Watch
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Microsoft (MSFT - Free Report) saw its stock price dip 1.40% during regular trading hours Tuesday just one day before the tech powerhouse is set to report its fiscal first-quarter financial results. But does this slip signal that investors are nervous about Microsoft? Let’s look at some of MSFT’s estimates to help us find out.
Overview
Shares of Microsoft have crushed the S&P 500 and their industry’s average since the start of the year. With that said, the last three months have seen MSFT stock move nearly sideways, which includes a 5.5% dip over the past month.
Yet Microsoft’s business might be as strong as ever as it continues to push into AI, IoT, and cloud computing. In fact, Microsoft claimed 14% of the cloud market last quarter to come in second behind Amazon’s (AMZN - Free Report) 34%, according to Synergy Research Group. This also crushed IBM’s (IBM - Free Report) 8%, Google’s 6% (GOOGL - Free Report) , and Alibaba’s (BABA - Free Report) 4%.
Q1 Outlook
Our current Zacks Consensus Estimate is calling for Microsoft’s fiscal first-quarter revenues to jump 13% to hit $27.73 billion. Plus, the firm’s Intelligent Cloud unit is projected to pop by just over 20% from $6.922 billion in the year-ago period to touch $8.327 billion in Q1, based on our NFM estimates.
Meanwhile, MSFT’s adjusted quarterly earnings are projected to surge 14.3% to touch $0.96 per share. We still also need to know how likely it is that Microsoft tops our quarterly earnings estimate.
Luckily, we can turn to our exclusive Earnings ESP figure to help us. The Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Microsoft is currently a Zacks Rank #2 (Buy) that rocks an earnings ESP of -0.08%. Unfortunately, this means that our earnings beat outlook is inconclusive. However, MSFT has only missed our quarterly earnings estimates twice in the last four years, including nine straight bottom line beats.
Make sure to check back here for our full analysis of Microsoft’s actual results after the firm reports its Q1 financial metrics after the market closes on Wednesday.
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And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Microsoft (MSFT) Stock Slips 1.4% Ahead of Q1 Earnings: What to Watch
Microsoft (MSFT - Free Report) saw its stock price dip 1.40% during regular trading hours Tuesday just one day before the tech powerhouse is set to report its fiscal first-quarter financial results. But does this slip signal that investors are nervous about Microsoft? Let’s look at some of MSFT’s estimates to help us find out.
Overview
Shares of Microsoft have crushed the S&P 500 and their industry’s average since the start of the year. With that said, the last three months have seen MSFT stock move nearly sideways, which includes a 5.5% dip over the past month.
Yet Microsoft’s business might be as strong as ever as it continues to push into AI, IoT, and cloud computing. In fact, Microsoft claimed 14% of the cloud market last quarter to come in second behind Amazon’s (AMZN - Free Report) 34%, according to Synergy Research Group. This also crushed IBM’s (IBM - Free Report) 8%, Google’s 6% (GOOGL - Free Report) , and Alibaba’s (BABA - Free Report) 4%.
Q1 Outlook
Our current Zacks Consensus Estimate is calling for Microsoft’s fiscal first-quarter revenues to jump 13% to hit $27.73 billion. Plus, the firm’s Intelligent Cloud unit is projected to pop by just over 20% from $6.922 billion in the year-ago period to touch $8.327 billion in Q1, based on our NFM estimates.
Meanwhile, MSFT’s adjusted quarterly earnings are projected to surge 14.3% to touch $0.96 per share. We still also need to know how likely it is that Microsoft tops our quarterly earnings estimate.
Luckily, we can turn to our exclusive Earnings ESP figure to help us. The Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Microsoft is currently a Zacks Rank #2 (Buy) that rocks an earnings ESP of -0.08%. Unfortunately, this means that our earnings beat outlook is inconclusive. However, MSFT has only missed our quarterly earnings estimates twice in the last four years, including nine straight bottom line beats.
Make sure to check back here for our full analysis of Microsoft’s actual results after the firm reports its Q1 financial metrics after the market closes on Wednesday.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>