Microsoft’s stock (NASDAQ: MSFT) is scheduled to report its fiscal Q2 2022 (ended Dec 2021) results on Tuesday, January 25. We expect MSFT to beat the consensus estimates for revenues and earnings. The company has reported better than expected revenue and earnings figures in each of the last four quarters. MSFT’s revenue growth continued in Q1 of FY 2022 led by the Intelligent Cloud segment which saw revenue grow by 31% y-o-y. We expect the segment to drive the second-quarter FY2022 results, as well.
Our forecast indicates that Microsoft’s valuation is $361 per share, which is 16% above the current market price of $311. Look at our interactive dashboard analysis on Microsoft’s pre-earnings: What To Expect in Q2? for more details.
(1) Revenues expected to be ahead of consensus estimates
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Microsoft revenues for full-year 2021 were $168 billion – up 18% y-o-y, with high growth seen in the Intelligent Cloud segment. Trefis estimates MSFT’s fiscal Q2 2022 (ended Dec 2021) revenues to be around $51.1 billion, above the $50.9 billion consensus estimate. We expect the Intelligent Cloud segment to continue driving the growth in the Q2. Our dashboard on Microsoft revenues offers more details on the company’s operating segments along with our forecast for the next two years.
(2) EPS likely to beat the consensus estimates
MSFT’s Q2 2022 (ended Dec 2021) earnings per share (EPS) is expected to be $2.35 per Trefis analysis, slightly above the consensus estimate of $2.32. In FY 2022, we expect the company to see a slight fall in net income margin to 35.5%, but overall EPS to improve to $9.25.
(3) Stock price estimate 14% above the current market price
Going by our Microsoft’s valuation, with an FY 2022 EPS estimate of $9.25 and a P/E multiple of 39x, translates into a price of $361, which is 16% above the current market price of $311.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year
While MSFT stock is likely to move higher in the near term, Microsoft Peer Comparisons summarizes how the company fares against peers on metrics that matter.
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|S&P 500 Return||-3%||-3%||107%|
|Trefis MS Portfolio Return||-9%||-9%||256%|
 Month-to-date and year-to-date as of 1/20/2022
 Cumulative total returns since the end of 2016