Microsoft Corp MSFT is set to report first-quarter fiscal 2019 results on Oct 24.
Notably, Microsoft has a positive record of earnings surprises in the trailing four quarters, with an average surprise of 11.42%. Last quarter, the company delivered a positive earnings surprise of 5.61%.
Microsoft has also beaten the Zacks Consensus Estimate for revenues in the past four quarters. In the last quarter, revenues of $30.09 billion increased 17.5% from the year-ago quarter (up 13% in constant currency) and exceeded the Zacks Consensus Estimate of $29.21 billion.
The Zacks Consensus Estimate for first-quarter fiscal 2019 earnings and revenues is currently pegged at 96 cents and $27.72 billion, respectively.
Azure Strength to Aid Growth
Momentum in Microsoft's cloud computing service - Azure - is likely to drive growth in the to-be-reported quarter. Azure revenues soared 85% at constant currency on a year-over-year basis in the last reported quarter. Customer base continued to expand with Walmart selecting the cloud platform.
Notably, Azure has become a preferred partner for government departments in recent times. The cloud platform has been selected by the likes of Alaska Department of Transportation, Duo+ based out of the Netherlands, and South African government unit Department of Science and Technology, to name a few.
Microsoft Corporation Price and EPS Surprise
Microsoft Corporation Price and EPS Surprise | Microsoft Corporation Quote
Azure's increased availability in 54 regions globally, more than any other cloud provider, is helping it compete against the likes of Amazon AMZN and Alphabet GOOGL. Notably, per latest data from Synergy Research Group, Azure's market share trail only Amazon Web Services (AWS).
For the first quarter, Microsoft expects Intelligent Cloud revenues (Azure falls under this segment) between $8.15 billion and $8.35 billion.
Robust Office 365 Adoption, LinkedIn Growth Other Drivers
Office 365 is a subscription plan to access Office applications and other productivity services utilized in cloud services. Microsoft is striving to catch up with Alphabet's G-Suite by empowering Office 365.
Expanding portfolio is the major growth driver. The company is incorporating artificial intelligence (AI) capabilities in its Office 365 solutions, which are expected to boost adoption rate. LinkedIn is also growing faster than previously anticipated.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Microsoft has a Zacks Rank #2 and an Earnings ESP of +0.79%, which indicates a likely positive surprise. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Other Stocks to Consider
Here is a stock you may consider as our proven model shows that it has the right combination of elements to post an earnings beat this quarter.
Apple AAPL has an Earnings ESP of +2.45% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
Wall Street's Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research