Microsoft Corporation (MSFT): Low Growth But Reasonable Valuations And Strong Capital Position

The price of Microsoft Corporation (NASDAQ:MSFT) stock ended January 15, 2020 trading at $163.18 which saw downtrend of 3.47% since the beginning of 2020. For most investors, the 0.65% rally in the share price could have prompted them to buy the stock, but doing that would be a mistake as it would be taking into consideration only the short-term performance of the stock.

A look at the MSFT stock today shows that it has gained 55.39% of its value over the past one year, which has led to some investors becoming excited about the short-term performance of Microsoft Corporation (NASDAQ:MSFT). If we turn to the stock analysts in general, they revealed that most of them are still bullish about the chances of the shares. The consensus rating from analysts for Microsoft Corporation (MSFT) is 1.6 which is a buy rating. Over the past week, the stock has been rated as a Buy 21 times while it has been rated as a Hold 1 times. The 52-week high price for MSFT is $163.6 which is attained on January 15 while its 52-week low currently stands at $101.88 and was reached on January 29. At the moment, the stock is trading $2.38 above its YTD moving average set at $160.8.

Moving on, Microsoft Corporation (MSFT) last released its earnings for the September 2020 quarter of the fiscal year. The company performed decently over the past three months, with its earnings up 20% year-over-year at $1.38. The company brought a surprise of 10 as analysts were predicting $1.25 per share. The revenue generated by Microsoft Corporation in the September 2020 quarter surged by 14% to reach $33.06 billion. This is high compared to the $29.08 billion it recorded in the same quarter last year. To see what traders should watch in its December 2019 financial results, analysts have consensus earnings per share of $1.32 which is higher than the $1.1 recorded in the same quarter a year ago. Over the next 12 months, the earnings per share are expected to move by 12.44%. If it achieves that, then the company firmly believes that its long-term annual earnings growth rate target set at 14.5 % could be achieved. The company has also recorded a revenue of $129.81 billion over the past 12 months.

In order to determine if the stock is worthy of your patience, you should know that Microsoft Corporation (NASDAQ:MSFT) is now trading at 32.67X the earnings per share recorded over the past 12 months. This is an uptrend compared to the readings of the sector which is 32.06X while the industry average stands at 36.97X. The most popular way to value a stock is to look at its historic Price-to-Earnings (P/E) ratio with the help of its earnings report over the past 12 months. Microsoft Corporation was able to achieve an EPS of $5 during the last four quarters. The P/E ratio is widely known due to the fact that it is widely used, simple, effective, and, tautologically.

On Wednesday, January 15 of 2020, the 14-day Absolute ATR (Average True Range) for MSFT moved by $1.93. Over the past seven days, the stock’s average daily volatility stood at 1.06%. A stock with a low volatility is usually a good one as it means that investors are very confident in the stock. Microsoft Corporation’s trading volume has recently moved to 21.2 million, which is compared with the average daily volume of 21.98 million shares.

The daily chart for MSFT, points out that the company has recorded 19.75% gains over the past six months. However, it is still 60.17% higher than its most recent low trading price. The performance of the stock over the past five days shows that it is up 1.93% though it is 2.95% above its three-week moving average. It is worthy to know that price action is not always clear. There are times when a stock will undergo some negatives, trade erratically within some range or even act very unpredictable. When that happens, then making use of moving averages makes the pattern clearer for traders. Comparing to 50-day SMA, the price of the stock has surged by 6.73% while it is up 18.05% against the 200-day SMA. This is usually seen as the last support line for a stock, as a move downward could signal a bearish trend or market. The daily chart of MSFT reveals that it has gained some grounds as it ended Wednesday with a 5.6% rise over the past 30 days.