The Zacks Computer and Technology sector has tumbled in 2022 amid a hawkish pivot from the Federal Reserve, down more than 30% and widely lagging behind the S&P 500.

Image Source: Zacks Investment Research

A behemoth in the sector, Microsoft (MSFT Quick QuoteMSFT - Free Report) , is slated to unveil quarterly earnings on October 25^th after the market close.

Currently, the tech titan carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of a D.

How does everything stack up heading into the quarterly print? Let’s take a closer look.

Share Performance & Valuation

Microsoft shares have underperformed the general market by a fair margin in 2022, down nearly 27%, vs. the S&P 500’s decline of roughly 21%.

Image Source: Zacks Investment Research

Over the last three months, however, MSFT shares have primarily traded in line with the general market, as shown in the chart below.

Image Source: Zacks Investment Research

On a relative basis, Microsoft shares are at a cheap price point; the company’s 24.2X forward earnings multiple is well beneath its five-year median of 28.5X and nowhere near 2021 highs of 37.5X.

Image Source: Zacks Investment Research

MSFT carries a Style Score of a C for Value.

Quarterly Estimates

Analysts have been bearish in their earnings outlook, with five negative earnings estimate revisions hitting the tape over the last several months. Still, the Zacks Consensus EPS Estimate of $2.30 reflects a marginal 1.3% Y/Y uptick in earnings.

Image Source: Zacks Investment Research

MSFT’s top-line is forecasted to register growth as well, with the Zacks Consensus Sales Estimate of $49.5 billion indicating Y/Y revenue growth of more than 9%.

Quarterly Performance & Market Reactions

Microsoft has consistently exceeded earnings expectations, with nine EPS beats across its last ten quarters.

However, the one miss out of the previous ten came in its latest quarterly report, when MSFT fell short of earnings expectations by 2%.

Revenue results paint a very similar story; MSFT has exceeded revenue expectations in nine of its last ten quarters, with the one sales miss coming in its latest report. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

Additionally, it’s worth noting that shares have moved upward following each of its last four quarterly prints, telling us that the market has liked what it’s seen from the company.

Putting Everything Together

MSFT shares have lagged behind the S&P 500 YTD but have primarily traded in line with the general market over the last several months.

Valuation multiples have fallen extensively following the stretch of poor price action, with the company’s forward P/E ratio now sitting well below its five-year median.

Analysts have been bearish for the quarter, with estimates suggesting a Y/Y uptick in earnings and revenue.

MSFT has repeatedly exceeded quarterly estimates but fell short on both the top and bottom lines in its latest print.

Heading into the release, Microsoft (MSFT Quick QuoteMSFT - Free Report) currently carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -0.6%.