In the latest trading session, Microsoft (MSFT) closed at $239.58, marking a -0.1% move from the previous day. This change was narrower than the S&P 500’s daily loss of 0.4%. Elsewhere, the Dow lost 0.03%, while the tech-heavy Nasdaq lost 4.72%.
Heading into today, shares of the software maker had lost 4.15% over the past month, outpacing the Computer and Technology sector’s loss of 8.46% and the S&P 500’s loss of 5.57% in that time.
Microsoft will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.28, down 8.06% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $52.93 billion, up 2.32% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.54 per share and revenue of $212.38 billion. These totals would mark changes of +3.58% and +7.12%, respectively, from last year.
Any recent changes to analyst estimates for Microsoft should also be noted by investors. 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.
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 remained stagnant within the past month. Microsoft currently has a Zacks Rank of #4 (Sell).
Investors should also note Microsoft’s current valuation metrics, including its Forward P/E ratio of 25.13. Its industry sports an average Forward P/E of 25.13, so we one might conclude that Microsoft is trading at a no noticeable deviation comparatively.
It is also worth noting that MSFT currently has a PEG ratio of 2.33. 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. The Computer – Software was holding an average PEG ratio of 1.95 at yesterday’s closing price.
The Computer – Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 89, putting it in the top 36% 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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