Microsoft’s Earnings SNEAK PEEK

S&P 500 (NYSE:SPY) component Microsoft (NASDAQ:MSFT) will unveil its latest earnings on Thursday, July 19, 2012. Microsoft develops, licenses, and supports a range of software products and services for a variety of computing devices.

Microsoft Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 63 cents per share, a decline of 8.7% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 65 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 63 cents during the last month. Analysts are projecting profit to rise by 1.5% versus last year to $2.69.

Past Earnings Performance: The company is looking to top estimates for the third straight quarter. Last quarter, it reported profit of 60 cents per share against a mean estimate of net income of 57 cents, and the quarter before, the company exceeded forecasts by 2 cents with profit of 78 cents versus a mean estimate of net income of 76 cents.

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Stock Price Performance: Between April 18, 2012 and July 13, 2012, the stock price fell $1.75 (-5.6%), from $31.14 to $29.39. The stock price saw one of its best stretches over the last year between September 9, 2011 and September 19, 2011, when shares rose for seven straight days, increasing 5.7% (+$1.47) over that span. It saw one of its worst periods between November 11, 2011 and November 25, 2011 when shares fell for 10 straight days, dropping 9.7% (-$2.61) over that span.

Wall St. Revenue Expectations: Analysts are projecting a rise of 4.4% in revenue from the year-earlier quarter to $18.14 billion.

A Look Back: In the third quarter, profit fell 2.4% to $5.11 billion (60 cents a share) from $5.23 billion (61 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 6% to $17.41 billion from $16.43 billion.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 8.3% in the fourth quarter of the last fiscal year, 7.3% in the first quarter and 4.7% in the second quarter before increasing again in the third quarter.

An income boost this time around would be welcome news after profit declines in the past two quarters. Net income dropped 0.2% in the second quarter and then again in the third quarter.

Analyst Ratings: With 19 analysts rating the stock a buy, none rating it a sell and eight rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.94 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company improved this liquidity measure from 2.86 in the second quarter to the last quarter driven in part by an increase in current assets. Current assets increased 6% to $76.86 billion while liabilities rose by 3.1% to $26.17 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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