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Microsoft (MSFT) Dips More Than Broader Markets: What You Should Know

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Microsoft (MSFT - Free Report) closed the most recent trading day at $245.71, moving -0.64% from the previous trading session. This change lagged the S&P 500's 0.36% loss on the day.

Prior to today's trading, shares of the software maker had gained 0.34% over the past month. This has outpaced the Computer and Technology sector's loss of 0.29% and lagged the S&P 500's gain of 0.75% in that time.

Investors will be hoping for strength from MSFT as it approaches its next earnings release. On that day, MSFT is projected to report earnings of $1.90 per share, which would represent year-over-year growth of 30.14%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $44.07 billion, up 15.86% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.80 per share and revenue of $166.01 billion, which would represent changes of +35.42% and +16.08%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MSFT. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. MSFT is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MSFT has a Forward P/E ratio of 31.72 right now. For comparison, its industry has an average Forward P/E of 35.54, which means MSFT is trading at a discount to the group.

We can also see that MSFT currently has a PEG ratio of 2.45. 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 2.37 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 166, which puts it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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