Microsoft (MSFT) has been a popular stock on Zacks.com recently, with shares showing a +7% return over the past month compared to a +4% change in the Zacks S&P 500 composite. The Zacks Computer – Software industry, where Microsoft is located, has also gained 4.6% during this time. This raises the question of what may influence the stock’s performance moving forward.
Earnings estimate revisions are a key factor in evaluating a company’s future earnings outlook, as this impacts the fair value of its shares. Analysts covering Microsoft have revised their earnings estimates, with the consensus estimate for the current quarter at $2.90 per share (a +7.8% change year-over-year). The consensus earnings estimate for the current fiscal year is $11.77 (a +20% change year-over-year), and for the next fiscal year, it is $13.18 (a +12% change from a year ago).
Microsoft’s Zacks Rank of #3 (Hold) is influenced by recent consensus estimate changes and other factors related to earnings estimates. Revenue growth forecasts indicate positive year-over-year changes of +14.2% for the current quarter and +15.3% and +13.8% for the current and next fiscal years, respectively. In the last reported quarter, Microsoft reported revenue of $61.86 billion (a +17% change year-over-year) and EPS of $2.94 (compared to $2.45 a year ago), surpassing consensus estimates.
Valuation metrics, such as price-earnings (P/E), price-sales (P/S), and price-cash flow (P/CF), are important in determining whether a stock is fairly valued, overvalued, or undervalued. Microsoft currently has a Zacks Value Style Score of D, indicating a premium valuation compared to its peers.
Overall, the information presented on Zacks.com could provide insights into Microsoft’s performance, but the Zacks Rank #3 suggests that it may align with the broader market in the near term. It is important to consider various factors, including earnings estimates, revenue growth, historical surprises, and valuation metrics, when analyzing the potential of investing in Microsoft.
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