Microsoft (MSFT) plunges more than broader markets: what you need to know

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Microsoft (MSFT) closed the last day of trading at $275.85, down 1.1% from the previous trading session. That move lagged the S&P 500’s 0.72% daily loss.

Going into today, shares of the software maker had lost 7.32% over the past month, outpacing the IT & Technology sector’s 10.02% loss and lagging of the 6.24% loss of the S&P 500 during this period.

Microsoft will be looking to show some strength ahead of its next earnings release. In this report, analysts expect Microsoft to post earnings of $2.18 per share. This would mark a year-over-year growth of 11.79%. Meanwhile, our latest consensus estimate calls for revenue of $49 billion, up 17.48% from the prior year quarter.

Looking to the full year, our Zacks consensus estimates suggest analysts are expecting earnings of $9.32 per share and revenue of $198.21 billion. These totals would mark changes of +16.94% and +17.92%, respectively, from last year.

Investors might also notice recent changes in analyst estimates for Microsoft. These revisions help show the ever-changing nature of short-term trading trends. Therefore, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Research indicates that these revisions to estimates are directly correlated to near-term stock price dynamics. To benefit from this, we have developed the Zacks Rank, a proprietary model that takes into account these estimation changes and provides an actionable rating system.

The Zacks ranking system ranges from #1 (strong buy) to #5 (strong sell). It has a remarkable, externally audited track record of success with #1 stocks delivering an average annual return of +25% since 1988. Over the past 30 days, our consensus EPS projection has increased by 0.03%. Microsoft currently holds a Zacks rank of #3 (Hold).

Investors should also note Microsoft’s current valuation metrics, including its forward P/E ratio of 29.93. For comparison, its industry has an average Forward P/E of 28.39, meaning Microsoft is trading at a premium to the group.

We can also see that MSFT currently has a PEG ratio of 2.4. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. IT – software stocks average a PEG ratio of 2.43 based on yesterday’s closing prices.

The Computing – Software industry is part of the Computing and Technology sector. This group has a Zacks Industry Rank of 168, which places it in the bottom 34% of all 250+ industries.

The Zacks Industry Rankings are ranked from best to worst in terms of the average Zacks Ranking of individual companies in each of these industries. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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