Microsoft Corp (MSFT)

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Earnings Previews: Microsoft Corp. (MSFT)
By: 24/7 Wall St. | April 25, 2022

• Here is a look at four more firms set to report results after markets close Tuesday.

Microsoft

Over the past 12 months, Microsoft Corp. (NASDAQ: MSFT) has added about 6% to its share price. The Dow Jones industrial stock’s big attraction is its ability to generate cash. In the past four quarters, Microsoft’s operating cash flow totaled $83.9 billion. Free cash flow over that period totaled $60.7 billion. Total cash and investments summed to $125.3 billion at the end of the December quarter. Microsoft can easily handle its proposed all-cash acquisition of Activision Blizzard for around $75 billion and another 10% increase in its dividend wouldn’t cause any pain either.

Sentiment for the stock is virtually all positive. Of 47 analysts covering the stock, all but one have a Buy or Strong Buy rating, and the lone dissenter rates the stock at Hold. At a share price of around $274.00, the potential upside based on a median target of $368.00 is about 34.3%. At the high target of $411.00, the implied gain is 50%.

For its third quarter of fiscal 2022, revenue is forecast at $49.05 billion, down about 5.2% sequentially but up 17.6% year over year. Adjusted EPS are forecast at $2.20, down 11.4% sequentially and up 12.8% year over year. For the full fiscal year, current consensus estimates call for EPS of $9.44, up 18.4%, on revenue of $198.73 billion, up 18.2%.

Microsoft stock trades at 29.0 times expected 2022 EPS, 25.6 times estimated 2023 earnings of $10.71 and 22.0 times estimated 2024 earnings of $12.46 per share. The stock’s 52-week range is $238.07 to $349.67. Microsoft pays an annual dividend of $2.48 (yield of 0.91%). Total shareholder return over the past year was 7.4%.

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