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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 $275.85, moving -1.1% from the previous trading session. This move lagged the S&P 500's daily loss of 0.72%.

Heading into today, shares of the software maker had lost 7.32% over the past month, outpacing the Computer and Technology sector's loss of 10.02% and lagging the S&P 500's loss of 6.24% in that time.

Microsoft will be looking to display strength as it nears its next earnings release. In that report, analysts expect Microsoft to post earnings of $2.18 per share. This would mark year-over-year growth of 11.79%. Meanwhile, our latest consensus estimate is calling for revenue of $49 billion, up 17.48% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.32 per share and revenue of $198.21 billion. These totals would mark changes of +16.94% and +17.92%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Microsoft. These revisions help to show the ever-changing nature of near-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. Within the past 30 days, our consensus EPS projection has moved 0.03% higher. Microsoft is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Microsoft's current valuation metrics, including its Forward P/E ratio of 29.93. For comparison, its industry has an average Forward P/E of 28.39, which means Microsoft is trading at a premium to the group.

We can also see that MSFT currently has a PEG ratio of 2.4. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.43 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 168, putting it in the bottom 34% 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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