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

Microsoft (MSFT) closed the most recent trading day at $210.33, moving +1.48% from the previous trading session. This change outpaced the S&P 500's 0.83% gain on the day. Meanwhile, the Dow gained 1.2%, and the Nasdaq, a tech-heavy index, added 0.74%.

Heading into today, shares of the software maker had lost 8.8% over the past month, lagging the Computer and Technology sector's loss of 5.53% and the S&P 500's loss of 4.83% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. In that report, analysts expect MSFT to post earnings of $1.53 per share. This would mark year-over-year growth of 10.87%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $35.67 billion, up 7.92% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.39 per share and revenue of $155.26 billion. These totals would mark changes of +10.94% and +8.56%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for MSFT. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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 0.01% higher within the past month. MSFT is currently a Zacks Rank #3 (Hold).

Digging into valuation, MSFT currently has a Forward P/E ratio of 32.43. For comparison, its industry has an average Forward P/E of 33.31, which means MSFT is trading at a discount to the group.

Also, we should mention that MSFT has a PEG ratio of 2.37. 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 2.7 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 72, which puts it in the top 29% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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