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

In the latest trading session, Microsoft (MSFT) closed at $310.20, marking a +1.77% move from the previous day. This change outpaced the S&P 500's 0.08% gain on the day. Meanwhile, the Dow lost 0.56%, and the Nasdaq, a tech-heavy index, lost 4.81%.

Coming into today, shares of the software maker had lost 4.2% in the past month. In that same time, the Computer and Technology sector lost 2.99%, while the S&P 500 gained 0.64%.

Wall Street will be looking for positivity from Microsoft as it approaches its next earnings report date. This is expected to be January 25, 2022. In that report, analysts expect Microsoft to post earnings of $2.29 per share. This would mark year-over-year growth of 12.81%. Our most recent consensus estimate is calling for quarterly revenue of $50.32 billion, up 16.82% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.13 per share and revenue of $194.98 billion, which would represent changes of +14.55% and +16%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Microsoft. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.1% higher within the past month. Microsoft currently has a Zacks Rank of #2 (Buy).

Investors should also note Microsoft's current valuation metrics, including its Forward P/E ratio of 33.97. This represents a discount compared to its industry's average Forward P/E of 37.46.

Investors should also note that MSFT has a PEG ratio of 2.82 right now. 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 industry currently had an average PEG ratio of 2.82 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 158, which puts it in the bottom 39% 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.

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

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