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Microsoft (MSFT) Exceeds Market Returns: Some Facts to Consider

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In the latest trading session, Microsoft (MSFT - Free Report) closed at $525.18, marking a +1.48% move from the previous day. The stock's change was more than the S&P 500's daily gain of 0.66%. Elsewhere, the Dow gained 0.18%, while the tech-heavy Nasdaq added 1.05%.

Heading into today, shares of the software maker had gained 3.57% over the past month, lagging the Computer and Technology sector's gain of 6.36% and outpacing the S&P 500's gain of 0.55%.

The upcoming earnings release of Microsoft will be of great interest to investors. The company's earnings per share (EPS) are projected to be $4.7, reflecting a 13.8% increase from the same quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $90.63 billion, indicating a 16.68% growth compared to the corresponding quarter of the prior year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $19.62 per share and a revenue of $389.65 billion, indicating changes of +9.3% and +17.42%, respectively, from the former year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Microsoft. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Within the past 30 days, our consensus EPS projection has moved 0.02% higher. Microsoft is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Microsoft is holding a Forward P/E ratio of 26.38. This signifies a premium in comparison to the average Forward P/E of 15.71 for its industry.

We can additionally observe that MSFT currently boasts a PEG ratio of 1.66. 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. The Computer - Software was holding an average PEG ratio of 1.45 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 103, finds itself in the top 42% echelons of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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