Has Microsoft stock peaked with FY2021 profits nearby?


Microsoft (NASDAQ: MSFT) is expected to release its results for the fourth quarter of fiscal 2021 on Tuesday, July 27. We expect MSFT to exceed consensus estimates for revenue, but miss for earnings. The company has posted better-than-expected sales and earnings in each of the past four quarters. In the first nine months, the company saw 16% year-on-year revenue growth, led by the smart cloud segment, growing over 22% year-on-year. We expect the Intelligent Cloud segment to end the year on a high level while also maintaining the growth in results for the fourth quarter of fiscal 2021. Our forecast indicates that Microsoft’s valuation is about $ 292 per share, or about 4.5% above the current market price of $ 279. Check out our interactive dashboard analysis at Microsoft’s pre-earnings: what to expect in Q4? for more details.

(1) Revenue expected ahead of consensus estimates in Q4

Trefis estimates MSFT’s fourth quarter 2021 revenue to be around $ 42.64 billion, up 4% from the consensus estimate of $ 41.03 billion. MSFT’s revenue growth was driven by the smart cloud segment for the first nine months of fiscal 2021 (ended June 2021). We expect momentum to continue in the last quarter of fiscal 2021. Overall, we forecast approximately $ 164.6 billion in revenue for fiscal 2021. Our dashboard on Microsoft’s revenue offers more details on the business segments.

(2) EPS likely to miss consensus estimates

MSFT’s earnings per share in the fourth quarter of 2021 is expected to be $ 1.30 per Trefis analysis, lower than the consensus estimate of $ 1.77. The company’s net profit margin is expected to be higher in fiscal 2021. In total, the company is expected to post EPS of approximately $ 7.19 in fiscal 2021.

(3) Estimate of the share price 4.5% above the current market price

Through our Microsoft’s valuation, with an EPS estimate of about $ 7.19 and a P / E multiple of 40.6x in fiscal 2021, results in a price of $ 292, which is 4.5% above the price current market of about $ 279.

Note: P / E multiples are based on the stock price at the end of the year and reported (or expected) adjusted earnings for the entire year

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