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Microsoft (MSFT) Gains But Lags Market: What You Should Know

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In the latest trading session, Microsoft (MSFT - Free Report) closed at $119.93, marking a +0.03% move from the previous day. The stock lagged the S&P 500's daily gain of 0.11%. Elsewhere, the Dow lost 0.32%, while the tech-heavy Nasdaq added 0.19%.

Prior to today's trading, shares of the software maker had gained 8.61% over the past month. This has outpaced the Computer and Technology sector's gain of 5.46% and the S&P 500's gain of 3.84% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. On that day, MSFT is projected to report earnings of $1 per share, which would represent year-over-year growth of 5.26%. Our most recent consensus estimate is calling for quarterly revenue of $29.83 billion, up 11.24% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.41 per share and revenue of $123.87 billion. These totals would mark changes of +13.66% and +12.24%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for MSFT. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.14% higher. MSFT currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, MSFT is holding a Forward P/E ratio of 27.16. This valuation marks a discount compared to its industry's average Forward P/E of 30.41.

It is also worth noting that MSFT currently has a PEG ratio of 2.2. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Computer - Software stocks are, on average, holding a PEG ratio of 2.2 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 18, putting it in the top 8% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.




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