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

In the latest trading session, Microsoft (MSFT) closed at $165.70, marking a -0.48% move from the previous day. This move lagged the S&P 500's daily gain of 0.03%. Meanwhile, the Dow lost 0.03%, and the Nasdaq, a tech-heavy index, added 0.14%.

Heading into today, shares of the software maker had gained 5.79% over the past month, lagging the Computer and Technology sector's gain of 6.3% and outpacing the S&P 500's gain of 3.23% in that time.

Investors will be hoping for strength from MSFT as it approaches its next earnings release, which is expected to be January 29, 2020. The company is expected to report EPS of $1.32, up 20% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $35.69 billion, up 9.92% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.36 per share and revenue of $140.10 billion, which would represent changes of +12.84% and +11.33%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MSFT. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection has moved 0.12% higher. MSFT is currently a Zacks Rank #3 (Hold).

Looking at its valuation, MSFT is holding a Forward P/E ratio of 31.08. This valuation marks a discount compared to its industry's average Forward P/E of 33.48.

Meanwhile, MSFT's PEG ratio is currently 2.61. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software industry currently had an average PEG ratio of 2.28 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 66, putting it in the top 26% 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.

To follow MSFT in the coming trading sessions, be sure to utilize Zacks.com.

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