Microsoft Corp. (MSFT) recently hit a new 52-week high ahead of the company’s better than expected Q2 results from late January that handily beat expectations.
Company Description
Microsoft Corp provides software and hardware solutions for a wide range of personal and corporate customers worldwide. The company was founded in 1975 and has a market cap of $250 billion.
Second-Quarter Results
Sales were up 14% from last year to $19.02 billion. Earnings also came in strong at 74 cents per share, 15 cents ahead of the Zacks Consensus Estimate. The company has surprised in each of the last four quarters by an average of 12 cents, or 25%.
Microsoft said that strong demand for its new Windows 7 operating system led to the strong results, which included $1.71 billion in deferred revenue, or 14 cents per share, related to Windows 7 upgrades and presales. As it stands, Microsoft has sold 60 million copies of Windows 7, making it the fastest selling operating system in history.
Cautious Outlook
In spite of the solid results, Microsoft CFO Peter Klein was a bit cautious about the company’s outlook, saying we have not seen a return of enterprise spending growth” and expects this dynamic to continue into the third quarter.
Estimates
The analysts were a bit more optimistic, with the current year adding 10 cents to $1.95. The next-year estimate added 7 cents to $2.18, a solid 12% growth projection.
In spite of robust gains over the last year, MSFT still looks reasonably valued, trading with a forward P/E multiple of 14X, a slight discount to the overall market.
The Chart
Shares of MSFT recently hit a new 52-week high at $31.50 ahead of the company’s Q2 results. Shares have pulled back a bit over the last few days to a long-term trend line, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
