Stock Review: Why Microsoft (NASDAQ MSFT) Is A Great Buy

Microsoft Corporation (NASDAQ MSFT) shares rallied more than 3 percent on Thursday in extended-hours trading after the world’s largest software company beat expectations and tallied record first-quarter sales, driven by the company’s cloud strength and hardware progress.

The Seattle-based company turned in a fiscal first-quarter profit of $4.54 billion, or 54 cents per share, on revenue of $23.2 billion, compared with earnings of $5.24 billion, or 64 cents per share, on revenue of $18.53 billion a year earlier. Wall Street had expected the software giant to report a profit of $4.08 billion, or 49 cents a share, excluding items, on revenue of $22.01 billion, according to analysts polled by Reuters.

“We are innovating faster, engaging more deeply across the industry, and putting our customers at the center of everything we do, all of which positions Microsoft for future growth,” CEO Satya Nadella said in the earnings report.

During the period ended Sept. 30, Microsoft said strong performance across commercial and consumer segments drove revenue growth. Revenue from the company’s Devices and Consumer unit grew 47 percent to $10.96 billion, and Microsoft’s Commercial revenue grew 10 percent to $12.28 billion.

News on Microsoft Corporation (NASDAQ MSFT)

Compared to other peers in the Business Software & Services sector, Microsoft has outperformed in terms of quarterly revenue growth year over year at 0.25 vs. the industry average of 0.21. Microsoft’s earnings per share is currently at 2.55, which surpasses the sector average of 0.10.

Microsoft is currently covered by 35 Wall Street analysts. The mean target price is $48.97 according to First Call. This presents a solid upside to the current price of the equity. The Mean Recommendation sits at 2.5,which is based on 5 Strong Buy, 10 Buy and 17 Hold ratings.

Microsoft Corporation (NASDAQ MSFT) Business News

The most recent analyst actions consisted of BMO Capital Markets initiating the stock on October 9th and FBR Capital initiating coverage with an upgrade rating back in June. The current quarter EPS consensus estimate is .72 with revenue estimates of 26.44B. Sales are expected to grow at a 7.90% rate. Microsoft reported actual earnings last quarter of 0.54,which beats the .49 consensus estimate, a 10.20% surprise.

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