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Microsoft (MSFT) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3-min read

Microsoft (MSFT) closed the most recent trading day at $224.91, moving +0.25% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.03%. Elsewhere, the Dow lost 0.04%, while the tech-heavy Nasdaq added 0.55%.

Coming into today, shares of the software maker had gained 1.5% in the past month. In that same time, the Computer and Technology sector gained 5.24%, while the S&P 500 gained 3.99%.

MSFT will be looking to display strength as it nears its next earnings release, which is expected to be January 26, 2021. The company is expected to report EPS of $1.64, up 8.61% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $40.12 billion, up 8.72% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.73 per share and revenue of $157.35 billion, which would represent changes of +16.84% and +10.02%, respectively, from the prior year.

Any recent changes to analyst estimates for MSFT should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for 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.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. MSFT is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that MSFT has a Forward P/E ratio of 33.35 right now. This valuation marks a discount compared to its industry's average Forward P/E of 36.18.

We can also see that MSFT currently has a PEG ratio of 2.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.81 based on yesterday's closing prices.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 180, which puts it in the bottom 30% 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.

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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