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Why LinkedIn & Office 365 Will Pad Microsoft's Q1 Earnings Report

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Shares of Microsoft (MSFT - Free Report) experienced marginal gains on Monday morning, only days ahead of its upcoming first quarter 2018 earnings report.

Microsoft is one of the largest technology companies in the world, which means all eyes will be on the tech power later this week. Therefore, investors need to begin to dive into Microsoft and learn more about the details surrounding the company’s upcoming Q1 report.

Microsoft, which once looked doomed to suffer from a global drop off in PC sales, seems ready to continue its current string of success. The company proved it was able to buck the negative PC sales trend in part by adopting a “freemium” model for Windows 10. On top of that, Microsoft turned its attention to Office 365 and Azure in order to bolster its future-looking businesses and renew investor confidence.

Only days before Microsoft is set to report, our current consensus estimates are calling for the company to post earnings of 73 cents per share and revenue of $23.53 billion. If these projections are met, they would represent year-over-year growth rates of -4.5% and +15.0%, respectively.

Microsoft’s bottom line is expected to slump, but its revenue gains are projected to be massive. What’s more, the stock is up nearly 27% year-to-date and currently sports a Zacks Rank #3 (Hold). Microsoft has also topped earnings estimates in 11 out of the last 12 quarters—which includes beats in the trailing five quarters.

Of course, earnings and revenues are just two of the many things analysts and investors will keep their eyes on when Microsoft reports on Thursday. Luckily, we can use our non-financial metrics estimates to gain a better understanding of how Microsoft might perform in its key divisions.

These important stock drivers are from our exclusive non-financial metrics consensus estimate file. These estimates are updated daily and are based on the independent research of expert stock analysts. Learn more here>>>

A division that many Microsoft investors should be interested in is Microsoft’s Productivity & Business Processes sector.

Microsoft’s Productivity & Business Processes unit has experienced a significant amount of growth recently, and this unit will now benefit from the company’s acquisition of LinkedIn, which closed in December 2016. On top of that, Office 365—a spin on its core suite of software that includes Word, Excel, PowerPoint, Outlook, and others—has surged recently.

With all of this said, our latest consensus estimates are calling for Productivity & Business Processes revenues to gain about 20.4% to hit $8.02 billion. In the previous quarter, Microsoft topped our consensus estimates for this segment and recorded year-over-year growth of 21.2%.

For more stock-moving estimates ahead of Microsoft’s Q1 report, check out our full guide: 3 Key Estimates for Microsoft's Q1 Earnings Report

And make sure to check back here for our full analysis of Microsoft’s actual results later this week!

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