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

Microsoft (MSFT) closed at $151.70 in the latest trading session, marking a +0.38% move from the prior day. This change outpaced the S&P 500's 0.29% gain on the day. At the same time, the Dow added 0.11%, and the tech-heavy Nasdaq gained 0.44%.

Heading into today, shares of the software maker had gained 2.76% over the past month, outpacing the Computer and Technology sector's gain of 1.17% and the S&P 500's gain of 1.51% in that time.

Wall Street will be looking for positivity from MSFT as it approaches its next earnings report date. The company is expected to report EPS of $1.32, up 20% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $35.70 billion, up 9.96% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.35 per share and revenue of $140.11 billion, which would represent changes of +12.63% and +11.34%, respectively, from the prior year.

Any recent changes to analyst estimates for MSFT should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.11% higher within the past month. MSFT currently has a Zacks Rank of #2 (Buy).

Digging into valuation, MSFT currently has a Forward P/E ratio of 28.24. For comparison, its industry has an average Forward P/E of 31.07, which means MSFT is trading at a discount to the group.

We can also see that MSFT currently 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. MSFT's industry had an average PEG ratio of 2.19 as of yesterday's close.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 60, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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