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Microsoft (MSFT) Ascends But Remains Behind Market: Some Facts to Note

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Microsoft (MSFT - Free Report) ended the recent trading session at $405.72, demonstrating a +1% swing from the preceding day's closing price. The stock fell short of the S&P 500, which registered a gain of 1.16% for the day. Meanwhile, the Dow experienced a rise of 1.2%, and the technology-dominated Nasdaq saw an increase of 1.16%.

Shares of the software maker witnessed a loss of 1.06% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 1.08% and the S&P 500's gain of 3.48%.

The investment community will be closely monitoring the performance of Microsoft in its forthcoming earnings report. In that report, analysts expect Microsoft to post earnings of $3.09 per share. This would mark year-over-year growth of 3.34%. Our most recent consensus estimate is calling for quarterly revenue of $64.45 billion, up 14.04% from the year-ago period.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $13.04 per share and a revenue of $277.39 billion, representing changes of +10.51% and +13.16%, respectively, from the prior year.

Any recent changes to analyst estimates for Microsoft should also be noted by investors. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. The Zacks Consensus EPS estimate has moved 0.02% lower within the past month. Microsoft is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Microsoft is currently trading at a Forward P/E ratio of 30.81. This indicates a premium in contrast to its industry's Forward P/E of 30.4.

We can also see that MSFT currently has a PEG ratio of 2.03. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As the market closed yesterday, the Computer - Software industry was having an average PEG ratio of 2.21.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 51, putting it in the top 21% of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.


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