Is Microsoft Stock Poised for More Success This Year?



Fiscal 3Q18 earnings could provide a stimulus

Microsoft (MSFT), a prominent player in the enterprise software space, announced its fiscal 3Q18 earnings on April 26, 2018, after the market closed.

The company reported revenue and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of ~$26.8 billion and $0.95, respectively, in the quarter, exceeding analysts’ expectations by $1.1 billion and $0.10, respectively. On a YoY (year-over-year) basis, Microsoft’s revenue and earnings rose 16% and 36%, respectively.

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The chart above shows Microsoft’s track record of meeting or surpassing analysts’ expectations in the last four years. In the past 16 quarters, including fiscal 3Q18, Microsoft’s quarterly revenues failed to meet analysts’ expectations only once. Its rapid stride in the cloud and AI (artificial intelligence) spaces has enabled its transformation from Windows only to a mobile cloud company.

To date in 2018, Microsoft stock has surged ~10.5%. Looking at its track record of meeting analysts’ expectations, Microsoft kept its trend of meeting or exceeding analysts’ expectations with fiscal 3Q18, too. Thus, it’s likely that 2018 will be one of the best years for Microsoft stock as well as its investors and shareholders.

Microsoft’s fiscal 4Q18 guidance exceeded analysts’ expectations

In its fiscal 3Q18 earnings release, Microsoft provided guidance for fiscal 4Q18. It expects its fiscal 4Q18 revenue to be in the range of $28.8 billion–$29.5 billion, which exceeds analysts’ expectations of $28.0 billion.

The Productivity and Business Processes segment’s revenue is expected to be in the range of $9.6 billion–$9.8 billion, the Intelligent Cloud segment’s revenue is expected to be in the range of $9.0 billion–$9.2 billion, and the MPC (More Personal Computing) segment’s revenue is expected to be in the range of $10.3 billion–$10.6 billion in fiscal 4Q18.


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