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2021-05-03

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Microsoft's Perfect Pullback Is A 'Strong Buy'

Shares of Microsoft encountered a negative market reaction following the release of the tech giant’s third-quarter earnings report.Microsoft’s most recentearnings report showed that the company is firing on all cylinders and experiencing its most rapid growth in revenues since 2018. In addition to providing stellar guidance, the report confirmed prior expectations that the company would surpass analyst estimates for both earnings and revenue for the period. However, the market failed to respond

Microsoft's Perfect Pullback Is A 'Strong Buy'

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{"i18n":{"language":"zh_CN"},"data":{"magic":2,"id":108897899,"tweetId":"108897899","gmtCreate":1620008956011,"gmtModify":1634208561110,"author":{"id":3555826125940153,"idStr":"3555826125940153","authorId":3555826125940153,"authorIdStr":"3555826125940153","name":"gweiming","avatar":"https://static.tigerbbs.com/3fb1b62a0a149175bb6fba468cb07689","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":4,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":4,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>👍🏻</p></body></html>","htmlText":"<html><head></head><body><p>👍🏻</p></body></html>","text":"👍🏻","highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":26,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/108897899","repostId":1160764065,"repostType":4,"repost":{"id":"1160764065","pubTimestamp":1620007749,"share":"https://www.laohu8.com/m/news/1160764065?lang=&edition=full","pubTime":"2021-05-03 10:09","market":"us","language":"en","title":"Microsoft's Perfect Pullback Is A 'Strong Buy'","url":"https://stock-news.laohu8.com/highlight/detail?id=1160764065","media":"seekingalpha","summary":"Shares of Microsoft encountered a negative market reaction following the release of the tech giant’s third-quarter earnings report.Microsoft’s  most recentearnings report showed that the company is firing on all cylinders and experiencing its most rapid growth in revenues since 2018. In addition to providing stellar guidance, the report confirmed prior expectations that the company would surpass analyst estimates for both earnings and revenue for the period. However, the market failed to respond","content":"<p><b>Summary</b></p>\n<ul>\n <li>Shares of Microsoft encountered a negative market reaction following the release of the tech giant’s third-quarter earnings report.</li>\n <li>But if the “magnitude of the beat” is the best reason analysts can offer when explaining this reaction, it's time to look the other way and start buying the stock.</li>\n <li>This failure to acknowledge strength in the company’s underlying performances has produced a pullback on the charts that should not be ignored by income investors looking to build tech exposure.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9d1587d0ad7a1930f15fdb9e800a44f6\" tg-width=\"1536\" tg-height=\"1102\"><span>Photo by Ethan Miller/Getty Images News via Getty Images</span></p>\n<p>Microsoft’s&nbsp;(NASDAQ:MSFT)&nbsp;most recentearnings report&nbsp;showed that the company is firing on all cylinders and experiencing its most rapid growth in revenues since 2018. In addition to providing stellar guidance, the report&nbsp;confirmed prior expectations&nbsp;that the company would surpass analyst estimates for both earnings and revenue for the period. However, the market failed to respond to these numbers in any way that reflected an optimistic outlook and the stock quickly dropped by nearly -5.5% in just two days. On a YTD basis, shares of MSFT are still higher by nearly 16% but the broader picture makes it clear that these recent declines have created a relatively obvious buying opportunity for investors looking to increase exposure in the stock.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c87c268148403b14d361c0ef6a1e2fb8\" tg-width=\"1006\" tg-height=\"577\"><span>Chart Analysis: The Income Machine</span></p>\n<p>For the third-quarter period, Microsoft posted an adjusted EPS figure of $1.95 and revenues of $41.71 billion. Of course, this was a substantial beat on the market’s expectations (EPS of $1.78 and revenues of $41 billion) but what might be most important in this case is the fact that Microsoft also offered revenue guidance that was higher than the market’s prior expectations. For long-term investors, this should be much more encouraging than the perceived negative that revenue growth from Microsoft’s Azure cloud segment was flat relative to the previous quarter or that the “magnitude” of the earnings beat was disappointing enough that it justifies lower valuations in share prices.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/bf8570f93f884f5b0161afa767b4dd6c\" tg-width=\"929\" tg-height=\"554\"><span>Source: Microsoft Earnings Release</span></p>\n<p>However, the market’s response to this release was highly inconsistent with the superior outlook currently supporting the company. While it can be said that weakness in operating margins became apparent during the quarter, income investors should note that Microsoft’s cloud component grew (both in terms of size and importance) and the magnitude of the company’s true negatives seem to have been largely exaggerated. All together, Microsoft’s third-quarter revenue figure revealed growth rates of +19% and that performance makes this the company’s best quarterly result since 2018.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e03d5c68911bae09a849649a4f91669b\" tg-width=\"699\" tg-height=\"594\"><span>Source: Macrotrends</span></p>\n<p>However, this incredible run isn’t expected to end once the global effects of the pandemic are finally in a position to show sustained declines. While it’s true that the 2020 market environment fueled an increase in personal computer sales that was large enough to produce shortages throughout the industry, these trends are more than likely to continue for the foreseeable future and this largely explains why Microsoft’s guidance figures continue to surprise to the upside. The company now expects to see&nbsp;revenues of $43.6-$44.5 billion&nbsp;for the fiscal fourth-quarter period and this easily surpasses the prior consensus estimates amongst analysts (which called for quarterly revenues of just under $43 billion).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eef2095303c29a653244452ce2282c7f\" tg-width=\"821\" tg-height=\"524\"><span>Source: Simply Wall Street</span></p>\n<p>If Microsoft can simply manage to reach the mid-point of its new guidance range, management’s current outlook indicates that we could be seeing quarterly revenue growth of roughly +16%. But given the broad strength of the company’s growth figures (across most segments), this is starting to look like a conservative estimate and this scenario suggests that Microsoft now finds itself in a position to under-promise and over-perform with its next earnings report.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/bc6a759c77cc1d2f5624e5fa076c7513\" tg-width=\"927\" tg-height=\"165\"><span>Source: Microsoft Earnings Release</span></p>\n<p>Quite possibly, the Azure Cloud segment might turn out to be the standout performer once again but this is in spite of the fact that the market appeared to be unimpressed with this segment’s most recent growth figures. That said, Microsoft did actually surpass the market’s expectations for growth in the segment (46%) and matched the superior growth performances that were recorded during the prior quarter (with segment gains of 50%). Overall, this helped the company’s Intelligent Cloud business (which also includes Windows Server, GitHub, Visual Studio, Enterprise Services and SQL Server) to generate revenues of $15.1 billion for the period and this indicates an annualized growth rate of +23% for the segment.</p>\n<p>Perhaps it could be argued that other segments failed to match these levels but the growth rates generated by the More Personal Computing and Productivity / Business Processes units were still quite respectable in their own right. Specifically, Microsoft’s More Personal Computing segment (which contains search, devices, and gaming in addition to Windows) generated just over $13 billion in revenues and this marks another quarterly gain of +19%. Furthermore, the company’s Productivity / Business Processes unit (which includes LinkedIn, Dynamics, and Office) produced nearly $13.6 billion in revenues and this indicates gains of +15% for the period.</p>\n<p>When we combined this with the news that advertising revenues from LinkedIn&nbsp;hit the $3 billion mark&nbsp;and beat the advertising revenues generated by Snapchat during the last full-year period, factors like the drop in operating margins from Microsoft’s Intelligent Cloud segment (from 44.5% to 42.5%) seem less consequential. Overall, declines in the company’s operating margins were much smaller (falling from 41.6% to 40.9%) and this simply does not seem to justify the market’s bearish reaction following Microsoft’s earnings release.</p>\n<p><img src=\"https://static.tigerbbs.com/1c9e5b8bd48dca6107d65bd5bc1591a9\" tg-width=\"717\" tg-height=\"305\"></p>\n<p>Moreover, there are still plenty of events that suggest the market environment is likely to remain favorable for the company. For example, the company recently&nbsp;completed its purchase&nbsp;of ZeniMax Media in a deal valued at close to $8 billion and Microsoft was alsogranted a contractto supply high-end headsets (augmented reality devices) for the United States Army in a massive deal valued at nearly $22 billion (over the next decade). Interestingly, the company is also benefitting from a surge in user activity associated with its Teams app, which&nbsp;now boasts 145 million DAUs&nbsp;(marking an increase of more than +26% since October 2020).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/22b57325aa6a271e6e0c8503c02c6195\" tg-width=\"1006\" tg-height=\"577\"><span>Chart Analysis: The Income Machine</span></p>\n<p>For all of these reasons, it looks as though Microsoft’s recent share price declines might be unsustainable and unlikely to continue much longer. After falling to lows of $249 per share, MSFT has stabilized and made an attempt to gain a foothold above $250 on the daily charts. Interestingly, there appears to be technical support that has become quite pronounced near the stock’s 100-day exponential moving average and this suggests that MSFT is likely to find new buyers in the event that the market bears make another attempt to send share prices below the aforementioned $250 level.</p>\n<p>At current price levels, Microsoft is trading with a price-earnings ratio of just over 34x but while this figure might indicate an elevated premium relative to the broader market, we must remember that the stock is still relatively cheap when compared to the industry averages in the U.S. software sector (which is associated with a price-earnings ratio of more than 51x). As another point of comparison, income investors should note that Microsoft’s return-on-equity figure comes in at an incredible 41.6% and this is far superior to the return-on-equity figure that is associated with the broader industry (at just 13.4%).</p>\n<p>Given that the technology space is widely known for its abilities to produce difficulties for income investors looking for stable yield at a reasonable price, we think that shares of MSFT should be looked at as a “strong buy” after its recent post-earnings decline. While the stock’s dividend yield might be considered somewhat low (at 0.89%), the ability for income investors to use this stock as a way of increasing exposure to the technology sector is a strategy that offers attractive advantages while still generating additional income for long-term retirement portfolios. Ultimately, it makes sense for the stock’s dividend yield to be viewed as an added incentive for the missing portfolio diversification that often plagues income investors that fail to establish enough exposure to the technology sector. Microsoft manages to check all of these boxes and this is why the stock should be considered as a stable name to buy after its recent short-term declines.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Microsoft's Perfect Pullback Is A 'Strong Buy'</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMicrosoft's Perfect Pullback Is A 'Strong Buy'\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-03 10:09 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4423645-microsoft-s-perfect-pullback-is-strong-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nShares of Microsoft encountered a negative market reaction following the release of the tech giant’s third-quarter earnings report.\nBut if the “magnitude of the beat” is the best reason ...</p>\n\n<a href=\"https://seekingalpha.com/article/4423645-microsoft-s-perfect-pullback-is-strong-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软"},"source_url":"https://seekingalpha.com/article/4423645-microsoft-s-perfect-pullback-is-strong-buy","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1160764065","content_text":"Summary\n\nShares of Microsoft encountered a negative market reaction following the release of the tech giant’s third-quarter earnings report.\nBut if the “magnitude of the beat” is the best reason analysts can offer when explaining this reaction, it's time to look the other way and start buying the stock.\nThis failure to acknowledge strength in the company’s underlying performances has produced a pullback on the charts that should not be ignored by income investors looking to build tech exposure.\n\nPhoto by Ethan Miller/Getty Images News via Getty Images\nMicrosoft’s (NASDAQ:MSFT) most recentearnings report showed that the company is firing on all cylinders and experiencing its most rapid growth in revenues since 2018. In addition to providing stellar guidance, the report confirmed prior expectations that the company would surpass analyst estimates for both earnings and revenue for the period. However, the market failed to respond to these numbers in any way that reflected an optimistic outlook and the stock quickly dropped by nearly -5.5% in just two days. On a YTD basis, shares of MSFT are still higher by nearly 16% but the broader picture makes it clear that these recent declines have created a relatively obvious buying opportunity for investors looking to increase exposure in the stock.\nChart Analysis: The Income Machine\nFor the third-quarter period, Microsoft posted an adjusted EPS figure of $1.95 and revenues of $41.71 billion. Of course, this was a substantial beat on the market’s expectations (EPS of $1.78 and revenues of $41 billion) but what might be most important in this case is the fact that Microsoft also offered revenue guidance that was higher than the market’s prior expectations. For long-term investors, this should be much more encouraging than the perceived negative that revenue growth from Microsoft’s Azure cloud segment was flat relative to the previous quarter or that the “magnitude” of the earnings beat was disappointing enough that it justifies lower valuations in share prices.\nSource: Microsoft Earnings Release\nHowever, the market’s response to this release was highly inconsistent with the superior outlook currently supporting the company. While it can be said that weakness in operating margins became apparent during the quarter, income investors should note that Microsoft’s cloud component grew (both in terms of size and importance) and the magnitude of the company’s true negatives seem to have been largely exaggerated. All together, Microsoft’s third-quarter revenue figure revealed growth rates of +19% and that performance makes this the company’s best quarterly result since 2018.\nSource: Macrotrends\nHowever, this incredible run isn’t expected to end once the global effects of the pandemic are finally in a position to show sustained declines. While it’s true that the 2020 market environment fueled an increase in personal computer sales that was large enough to produce shortages throughout the industry, these trends are more than likely to continue for the foreseeable future and this largely explains why Microsoft’s guidance figures continue to surprise to the upside. The company now expects to see revenues of $43.6-$44.5 billion for the fiscal fourth-quarter period and this easily surpasses the prior consensus estimates amongst analysts (which called for quarterly revenues of just under $43 billion).\nSource: Simply Wall Street\nIf Microsoft can simply manage to reach the mid-point of its new guidance range, management’s current outlook indicates that we could be seeing quarterly revenue growth of roughly +16%. But given the broad strength of the company’s growth figures (across most segments), this is starting to look like a conservative estimate and this scenario suggests that Microsoft now finds itself in a position to under-promise and over-perform with its next earnings report.\nSource: Microsoft Earnings Release\nQuite possibly, the Azure Cloud segment might turn out to be the standout performer once again but this is in spite of the fact that the market appeared to be unimpressed with this segment’s most recent growth figures. That said, Microsoft did actually surpass the market’s expectations for growth in the segment (46%) and matched the superior growth performances that were recorded during the prior quarter (with segment gains of 50%). Overall, this helped the company’s Intelligent Cloud business (which also includes Windows Server, GitHub, Visual Studio, Enterprise Services and SQL Server) to generate revenues of $15.1 billion for the period and this indicates an annualized growth rate of +23% for the segment.\nPerhaps it could be argued that other segments failed to match these levels but the growth rates generated by the More Personal Computing and Productivity / Business Processes units were still quite respectable in their own right. Specifically, Microsoft’s More Personal Computing segment (which contains search, devices, and gaming in addition to Windows) generated just over $13 billion in revenues and this marks another quarterly gain of +19%. Furthermore, the company’s Productivity / Business Processes unit (which includes LinkedIn, Dynamics, and Office) produced nearly $13.6 billion in revenues and this indicates gains of +15% for the period.\nWhen we combined this with the news that advertising revenues from LinkedIn hit the $3 billion mark and beat the advertising revenues generated by Snapchat during the last full-year period, factors like the drop in operating margins from Microsoft’s Intelligent Cloud segment (from 44.5% to 42.5%) seem less consequential. Overall, declines in the company’s operating margins were much smaller (falling from 41.6% to 40.9%) and this simply does not seem to justify the market’s bearish reaction following Microsoft’s earnings release.\n\nMoreover, there are still plenty of events that suggest the market environment is likely to remain favorable for the company. For example, the company recently completed its purchase of ZeniMax Media in a deal valued at close to $8 billion and Microsoft was alsogranted a contractto supply high-end headsets (augmented reality devices) for the United States Army in a massive deal valued at nearly $22 billion (over the next decade). Interestingly, the company is also benefitting from a surge in user activity associated with its Teams app, which now boasts 145 million DAUs (marking an increase of more than +26% since October 2020).\nChart Analysis: The Income Machine\nFor all of these reasons, it looks as though Microsoft’s recent share price declines might be unsustainable and unlikely to continue much longer. After falling to lows of $249 per share, MSFT has stabilized and made an attempt to gain a foothold above $250 on the daily charts. Interestingly, there appears to be technical support that has become quite pronounced near the stock’s 100-day exponential moving average and this suggests that MSFT is likely to find new buyers in the event that the market bears make another attempt to send share prices below the aforementioned $250 level.\nAt current price levels, Microsoft is trading with a price-earnings ratio of just over 34x but while this figure might indicate an elevated premium relative to the broader market, we must remember that the stock is still relatively cheap when compared to the industry averages in the U.S. software sector (which is associated with a price-earnings ratio of more than 51x). As another point of comparison, income investors should note that Microsoft’s return-on-equity figure comes in at an incredible 41.6% and this is far superior to the return-on-equity figure that is associated with the broader industry (at just 13.4%).\nGiven that the technology space is widely known for its abilities to produce difficulties for income investors looking for stable yield at a reasonable price, we think that shares of MSFT should be looked at as a “strong buy” after its recent post-earnings decline. While the stock’s dividend yield might be considered somewhat low (at 0.89%), the ability for income investors to use this stock as a way of increasing exposure to the technology sector is a strategy that offers attractive advantages while still generating additional income for long-term retirement portfolios. Ultimately, it makes sense for the stock’s dividend yield to be viewed as an added incentive for the missing portfolio diversification that often plagues income investors that fail to establish enough exposure to the technology sector. Microsoft manages to check all of these boxes and this is why the stock should be considered as a stable name to buy after its recent short-term declines.","news_type":1},"isVote":1,"tweetType":1,"viewCount":388,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":4,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}

Microsoft's Perfect Pullback Is A 'Strong Buy'

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