Market Overview

Microsoft's Earnings Outlook

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Microsoft (NASDAQ: MSFT) announces its next round of earnings this Tuesday, October 27. Here is Benzinga's everything-that-matters guide for this Tuesday's Q1 earnings announcement.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Analysts predict Microsoft will report earnings of $1.54 per share on revenue of $35.72 billion. Microsoft EPS in the same period a year ago totaled $1.38. Revenue was $33.05 billion.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Wall Street analysts who study this company will publish analyst estimates of revenue and EPS. The averages of all analyst EPS and revenue estimates are called the "consensus estimates"; these consensus estimates can have a significant effect on a company's performance during an earnings release. When a company posts earnings or revenue above or below a consensus estimate, it has posted an "earnings surprise", which can really move a stock depending on the difference between actual and estimated values.

If the company were to match the consensus estimate when it reports Tuesday, earnings would be up 11.59%. Sales would be up 8.06% from the year-ago period. In comparison to analyst estimates in the past, here is how the company's reported EPS stacks up:

Quarter Q4 2020 Q3 2020 Q2 2020 Q1 2019
EPS Estimate 1.37 1.26 1.32 1.24
EPS Actual 1.46 1.40 1.51 1.38
Revenue Estimate 36.50 B 33.66 B 35.67 B 32.23 B
Revenue Actual 38.03 B 35.02 B 36.91 B 33.05 B

Stock Performance

Shares of Microsoft were trading at $216.23 as of October 23. Over the last 52-week period, shares are up 50.16%. Given that these returns are generally positive, long-term shareholders should be content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Microsoft is scheduled to hold the call at 17:30:00 ET and can be accessed here.

 

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