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

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Microsoft (MSFT - Free Report) closed the most recent trading day at $183.51, moving +0.04% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.24%. Elsewhere, the Dow lost 0.04%, while the tech-heavy Nasdaq added 0.43%.

Investors will be hoping for strength from MSFT as it approaches its next earnings release. The company is expected to report EPS of $1.40, up 2.19% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $36.64 billion, up 8.66% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.69 per share and revenue of $141.52 billion. These totals would mark changes of +19.79% and +12.46%, respectively, from last year.

Any recent changes to analyst estimates for MSFT should also be noted by investors. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 2.38% higher within the past month. MSFT currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, MSFT is holding a Forward P/E ratio of 32.26. This valuation marks a premium compared to its industry's average Forward P/E of 29.58.

Also, we should mention that MSFT has a PEG ratio of 2.49. 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. The Computer - Software was holding an average PEG ratio of 2.65 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 81, which puts it in the top 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks 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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