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Microsoft (MSFT) Dips More Than Broader Markets: What You Should Know

In the latest trading session, Microsoft (MSFT) closed at $328.74, marking a -0.75% move from the previous day. This change lagged the S&P 500's 0.61% loss on the day. At the same time, the Dow lost 0.41%, and the tech-heavy Nasdaq gained 10.45%.

Heading into today, shares of the software maker had gained 8.45% over the past month, lagging the Computer and Technology sector's gain of 9.91% and outpacing the S&P 500's gain of 1.05% in that time.

Wall Street will be looking for positivity from Microsoft as it approaches its next earnings report date. In that report, analysts expect Microsoft to post earnings of $2.56 per share. This would mark year-over-year growth of 14.8%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $55.35 billion, up 6.73% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.66 per share and revenue of $211.08 billion. These totals would mark changes of +4.89% and +6.46%, respectively, from last year.

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It is also important to note the recent changes to analyst estimates for Microsoft. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 0.43% higher within the past month. Microsoft currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, Microsoft is holding a Forward P/E ratio of 34.31. This represents a premium compared to its industry's average Forward P/E of 27.06.

Also, we should mention that MSFT has a PEG ratio of 2.94. 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 2.05 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 98, which puts it in the top 39% 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.

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

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