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Microsoft Corporation (NASDAQ:MSFT) Q4 2019 Earnings Preview

Microsoft Corporation (NASDAQ:MSFT) Q4 2019 Earnings Preview

Microsoft MSFT stock dipped 1.3% during regular trading Tuesday, but still rests right near its 52-week highs. In fact, MSFT stock has soared 35% in 2019 to easily outpace its industry and the S&P 500.

With the tech firm set to release its Q4 fiscal 2019 financial results on Thursday, let’s see what to expect from not only its top and bottom lines but also some of its key business units such as Intelligent Cloud to help us see if its impressive run might continue.

Q2 Earnings Season Snapshot  

The big bank stocks helped unofficially kickstart second quarter earnings season on Monday and Tuesday. Overall, more than 140 companies are set to report their quarterly results this week. This list features nearly 60 S&P 500 members, which includes IBM IBM, Netflix NFLX, United Airlines, and many more

Total second-quarter earnings for the S&P 500 index are expected to be down 3.4% from the year-ago period on +3.9% higher revenues. This would follow a 0.2% decline on 4.5% higher revenues in Q1 (also read: Is the Bar Too Low for Q2 Earnings?).

Quick MSFT Overview

Microsoft is currently the world’s most valuable public company, with a market cap of over $1 trillion. The firm’s legacy Office and Windows businesses remain vital to enterprises and individuals. But it is Microsoft’s expansion into cloud computing that helped drive the stock and growth in recent years. The firm is now Amazon’s AMZN largest competitor in the space. MSFT’s cloud growth, led by Azure, has helped it stand out against everyone from Google GOOGL to IBM IBM.

The Redmond, Washington-based firm also expanded into artificial intelligence and IoT, as it continues to acquire firms. More recently, MSFT teased some of its next-generation video game plans to help capture more of the $135 billion global gaming industry.

Q4 Estimates

Looking ahead, MSFT’s Q4 fiscal 2019 revenue is projected to jump 8.8% to $32.73 billion, based our current Zacks Consensus Estimate. This would represent a slowdown from last quarter’s 14% expansion. With that said, investors should note that this expected growth would come on top of the year-ago period’s 17% climb.

At the bottom end of the income statement, Microsoft’s adjusted Q4 earnings are projected to pop 7.1% to reach $1.21 per share. Last quarter, the firm’s EPS grew by 20% and beat our estimates by 14%. MSFT almost always beats bottom-line projection though. This means we need to look at its specific business units to gain a more complete understanding of its outlook and how Wall Street might react, which we will do with the help of our Key Company Metrics.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 142.25.

The projected lower bound is: 132.24.

The projected closing price is: 137.24.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 67.7659. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 58.71. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 14 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 48. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.

Rex Takasugi – TD Profile

MICROSOFT CP closed down -1.820 at 137.080. Volume was 6% below average (neutral) and Bollinger Bands were 39% narrower than normal.

Open High Low Close Volume___
138.960 139.050 136.520 137.080 22,726,128

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period     50-period     200-period
Close: 137.57 130.96 115.71
Volatility: 12 25 34
Volume: 18,858,784 23,754,038 30,525,462

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

MICROSOFT CP is currently 18.5% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of MSFT.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on MSFT.O and have had this outlook for the last 24 periods.

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