The historic bull market is over and the coronavirus uncertainty looks set to remain as the economy stalls and companies pull their guidance. The Fed on Sunday slashed its benchmark interest rate to near zero and the Trump administration and lawmakers are trying to roll out a $1 trillion stimulus package.
Last week, Broadcom (AVGO - Free Report) pulled its full-year guidance and companies such as Apple (AAPL - Free Report) have closed their stores.
Back in late February, Microsoft (MSFT - Free Report) warned Wall Street that it is likely to fall short of its revenue guidance for its More Personal Computing segment, due to setbacks in China.
Luckily for investors, MSFT said that its Q3 guidance remained unchanged for its other units. This includes its key cloud computing revenue, which has driven growth recently.
Microsoft’s cloud segment is poised to grow for years as it competes against Amazon (AMZN - Free Report) and other giants. Looking ahead, our Zacks estimates call for MSFT’s sales to jump 12.7% and 11.7%, respectively in fiscal 2020 and 2021. At the bottom end of the income statement, the tech giant’s adjusted earnings are expected to surge 18.3% and 12.6% during this same stretch.
Despite all of the broader market negativity, MSFT’s earnings revisions picture remains largely positive. This helps Microsoft hold a Zacks Rank #1 (Strong Buy) at the moment. MSFT is also part of a highly-ranked Zacks industry.
On top of that, Microsoft’s 1.44% dividend yield currently tops the 10-year U.S. Treasury’s 1.06%, along with Apple’s 1.26%. Investors should note that MSFT has consistently raised its dividend and it continues to buy back stock.
Right now, Microsoft shares are down about 25% from their highs. But with stocks down big and the Dow at 2017 levels, some investors might want to think about buying stocks that appear to be solid longer-term holds.
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