Microsoft (MSFT) Sees a More Significant Dip Than Broader Market: Some Facts to Know

In the latest trading session, Microsoft (MSFT) closed at $395.55, marking a -1.57% move from the previous day. The stock's change was less than the S&P 500's daily loss of 0.61%. Meanwhile, the Dow experienced a drop of 0.26%, and the technology-dominated Nasdaq saw a decrease of 0.93%.

Heading into today, shares of the software maker had gained 0% over the past month, outpacing the Computer and Technology sector's loss of 1.56% and the S&P 500's loss of 2.25%.

Market participants will be closely following the financial results of Microsoft in its upcoming release. In that report, analysts expect Microsoft to post earnings of $4.05 per share. This would mark year-over-year growth of 17.05%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $81.4 billion, up 16.17% from the year-ago period.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $16.97 per share and revenue of $327.02 billion, indicating changes of +24.41% and +16.08%, respectively, compared to the previous year.

Investors should also take note of any recent adjustments to analyst estimates for Microsoft. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Currently, Microsoft is carrying a Zacks Rank of #3 (Hold).

Investors should also note Microsoft's current valuation metrics, including its Forward P/E ratio of 23.68. This denotes a premium relative to the industry average Forward P/E of 17.14.

Meanwhile, MSFT's PEG ratio is currently 1.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software industry had an average PEG ratio of 1.52 as trading concluded yesterday.

The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 61, placing it within the top 25% of over 250 industries.

The Zacks Industry Rank gauges the strength of our individual 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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This article originally published on Zacks Investment Research (zacks.com).

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