Q2 FY17 Expectations
Analyst consensus expects Microsoft Corporation (NASDAQ:MSFT) to report EPS of $0.78, same as the number reported in the year-ago quarter, on a revenue of $25.28B. This represents a 6.2% YoY growth in revenue. In the previous quarter, revenue came in at $20.6 B and EPS came in at $0.76. Microsoft did not give an EPS target for fiscal Q2 but forecasted sales of $25.05 billion ( which is based on the midpoint of its guidance range). These numbers suggest that Microsoft’s growth is picking up slowly after a long period of transition. Further, the consensus operating margin for Microsoft is 30% which is at the high end of the guided range (27.6%-31.0%).
Also last week only, CSLA’s Ed Maguire revised his earnings estimates for Microsoft. He now estimates Microsoft’s fiscal Q2 revenue at $25.275B, with $0.79 EPS, up from a prior $24.84B revenue and $0.76 EPS. Quoting him from a recent Barrons post (1):
“We forecast 44% growth in recognized revenues in FY17 driven by Azure, Dynamics and Office365. We view Office365 as a greenfield opportunity with less than 7% of the 1.2bn global users having migrated yet to subscription.”
There is a sense of increased optimism about Microsoft in the analyst community of late. Microsoft is believed to benefit along with Amazon.com, Inc. (NASDAQ:AMZN)’s AWS “as the proportion of Global 2000 workloads in the public cloud increases from 5% to 20% in 2017-2018″ as per CSLA. ( Read more about which is the new catalyst other than the cloud that would drive MSFT stock higher in this post.)
Microsoft Is Building Momentum Going Into Q2 Earnings
Microsoft Corporation (NASDAQ:MSFT) is one of the few companies which increases dividends and does stock buybacks on a regular basis, consistently providing value for investors in the long-term. Microsoft stock is picking up pace heading into the earnings announcement, rising consecutively in the last 5 days. MSFT stock is still a relatively safe long-term bet. It has received a number of analyst upgrades recently reflecting that the transition for Microsoft is at an inflection point. Many on the street believe Microsoft along with Amazon could be one of the first companies to breach the monumental $1 trillion market cap. Microsoft’s fiscal-second-quarter results, according to many analysts, will at least meet consensus. Long-term investors should consider buying MSFT stock on any pullback.
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The article Microsoft Corporation (MSFT): Is Microsoft Stock A Buy Going Into The Earnings? originally appeared on amigobulls.com. Watch our analysis video on MSFT
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