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Microsoft (MSFT) Ascends While Market Falls: Some Facts to Note

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The latest trading session saw Microsoft (MSFT - Free Report) ending at $407.72, denoting a +0.06% adjustment from its last day's close. The stock exceeded the S&P 500, which registered a loss of 0.17% for the day. On the other hand, the Dow registered a loss of 0.06%, and the technology-centric Nasdaq decreased by 0.55%.

The the stock of software maker has fallen by 0.27% in the past month, lagging the Computer and Technology sector's gain of 2.65% and the S&P 500's gain of 3.98%.

Market participants will be closely following the financial results of Microsoft in its upcoming release. It is anticipated that the company will report an EPS of $2.84, marking a 15.92% rise compared to the same quarter of the previous year. In the meantime, our current consensus estimate forecasts the revenue to be $60.66 billion, indicating a 14.76% growth compared to the corresponding quarter of the prior year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $11.63 per share and revenue of $243.69 billion, which would represent changes of +18.55% and +14.99%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Microsoft. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 4.34% higher. At present, Microsoft boasts a Zacks Rank of #2 (Buy).

Looking at valuation, Microsoft is presently trading at a Forward P/E ratio of 35.04. This valuation marks a premium compared to its industry's average Forward P/E of 31.2.

We can also see that MSFT currently has a PEG ratio of 2.17. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.37 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 64, putting it in the top 26% of all 250+ industries.

The Zacks Industry Rank is ordered 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.

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