Microsoft (MSFT) Falls Sharper Than Market: Investors Should Know

Microsoft (MSFT) concluded last trading day at $422.86, down 1.37%. The stock fell less than the S&P 500's 0.31% daily loss. The Dow fell 0.41% and the tech-heavy Nasdaq 0.27%. The software maker's stock rose 4.48% last month, outperforming the Computer and Technology sector's 3.86% and the S&P 500's 3.05%.

The investment community will watch Microsoft's forthcoming earnings report. The company's estimated EPS for the quarter is $2.84, up 15.92% from the prior year. Our latest consensus forecast is $60.63 billion in revenue, up 14.71 percent from the previous quarter.

The full-year Zacks Consensus Estimate for MSFT is $11.63 per share and $243.6 billion in revenue. These results would be +18.55% and +14.95% year-over-year.

Investors should also be aware of Microsoft analyst estimate changes. Recent changes indicate altering near-term business patterns. Thus, upbeat estimate changes imply analysts' optimism about the company's business health and profitability.

Our research shows that estimate changes predict stock price performance. We created the Zacks Rank, an exclusive algorithm that uses predicted changes to provide an operational grading system.

The Zacks Rank methodology, from #1 (Strong Buy) to #5 (Strong Sell), has outperformed externally audited, with #1 stocks winning 25% annually since 1988. The Zacks Consensus EPS projection was unchanged last month. Microsoft's Zacks Rank is #2 (Buy).

Microsoft's Forward P/E is 36.87. A premium over the industry's average Forward P/E of 31.03. MSFT's PEG ratio is 2.28. Though similar to the P/E ratio, the PEG ratio also considers the stock's predicted profits growth rate. Yesterday's Computer-Software industry PEG ratio averaged 2.43.

The Computer and Technology sector includes Computer Software. The Zacks Industry Rank of 45 puts this category in the top 18% of 250+ industries.

Stay turned for development