Microsoft Earnings Surge Expected Amid Positive Trends

Microsoft (MSFT) is trending upward with a projected EPS growth of 13.6% and positive earnings revisions. Analysts expect continued revenue growth, with the stock potentially performing in line with the broader market, reflected in its Zacks Rank #3.

Date: 31-05-2025

AI Rating: 7

Overview
Microsoft (MSFT) has exhibited favorable movements as its stock returned +7.8% over the past month, outperforming the S&P 500's +6.4% and the Computer Software industry’s +12.9%. As more investors turn their attention toward Microsoft, understanding the underlying fundamentals becomes crucial.

Earnings Per Share (EPS)
The company's expected EPS for the current quarter stands at $3.35, marking a +13.6% year-over-year increase. Additionally, the Zacks Consensus Estimate for the current fiscal year is $13.33, reflecting a significant year-over-year change of +13% which aligns with a +2.3% uptick in earnings estimates over the past 30 days. For the following fiscal year, the consensus estimate is $14.89, translating to an +11.7% increase year-over-year, which also includes a +2% revision in the estimates recently.

Revenue Growth
Microsoft's projected revenue growth indicates strong fundamentals. For the current quarter, the consensus sales estimate is $73.71 billion, up +13.9% compared to the previous year. Looking ahead, revenue estimates of $278.8 billion and $313.23 billion for the current and next fiscal years indicate growth rates of +13.7% and +12.4%, respectively. The robust revenue figures align with the earnings growth expectations, demonstrating a healthy pipeline for Microsoft.

Past Performance and Surprises
The last reported revenue was $70.07 billion, surpassing consensus estimates by +2.46%, while the EPS of $3.46 beat expectations by +8.13%. Such consistent outperformance in earnings and revenue composite has solidified Microsoft's reputation among investors.

Valuation Insights
Despite the positive outlook, it is essential to note Microsoft's Zacks Value Style Score, graded D, indicating a premium valuation compared to its peers. As the stock is believed to trade at a higher price than its underlying value, caution is advisable regarding entry points for potential investors.

Conclusion
In light of these indicators and the solid fundamental outlook, Microsoft holds a Zacks Rank #3 (Hold), which suggests it may perform in line with the overall market in the near term. Investors might find value in keeping an eye on this stock as revisions to earnings estimates and positive revenue growth could bode well for future price movements.

Stocks: MSFT