Microsoft (MSFT – Free Report) closed at $216.34 in the latest trading session, marking a +0.66% move from the prior day. This change outpaced the S&P 500’s 0.23% gain on the day. Elsewhere, the Dow lost 0.03%, while the tech-heavy Nasdaq added 0.43%.
Heading into today, shares of the software maker had gained 0.37% over the past month, lagging the Computer and Technology sector’s gain of 4.19% and the S&P 500’s gain of 3.86% in that time.
Investors will be hoping for strength from MSFT as it approaches 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, the Zacks Consensus Estimate for revenue is projecting net sales of $40.12 billion, up 8.72% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.73 per share and revenue of $157.35 billion. These totals would mark changes of +16.84% and +10.02%, respectively, from last year.
Investors might also notice recent changes to analyst estimates for MSFT. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.
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 0.03% lower within the past month. MSFT is currently a Zacks Rank #3 (Hold).
In terms of valuation, MSFT is currently trading at a Forward P/E ratio of 31.95. This represents a discount compared to its industry’s average Forward P/E of 32.19.
Also, we should mention that MSFT has a PEG ratio of 2.42. 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. MSFT’s industry had an average PEG ratio of 3 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 128, which puts it in the top 50% 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.