Microsoft stock slides despite record-breaking financial results

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jul 27, 2021
  • Microsoft Corp beats Wall Street estimates in the fiscal fourth quarter.
  • The tech titan reported record-breaking profit and revenue in fiscal 2021.
  • Shares of the company still tanked about 3% in after-hours trading.

Microsoft Corp (NASDAQ: MSFT) reported record performance for fiscal 2021 on Tuesday with $165 billion in sales and over $60 billion in profit. Shares of the company were still down about 3% in after-hours trading. Evercore ISI’s software analysts, however, are confident that the stock will eventually respond.

The easy answer to how Microsoft continues to outperform the S&P is that Microsoft continues to deliver double-digit top and bottom-line growth, Evercore’s analysts said.

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Evercore ISI rates Microsoft at ‘outperform’ with a price target of $300. The $2.16 trillion company currently has a price to earnings ratio of 39.00.

Q4 financial performance

Microsoft’s net earnings in the fiscal fourth quarter came in at $16.46 billion. On a per-share basis, the company earned $2.17 in Q4 versus the year-ago figure of $1.46. The tech titan generated $46.15 billion of revenue in the recent quarter – a sharp increase from last year’s $38.03 billion.

According to FactSet, experts had forecast $44.22 billion of revenue and $1.92 of EPS. LinkedIn revenue was up 51% in Q4.

Revenue from individual business segments

According to Microsoft, all of its segments topped analysts’ estimates in the fourth quarter. Revenue from productivity and business processes, more personal computing, intelligent cloud climbed on a year-over-year basis to $14.69 billion, $14.09 billion, and $17.38 billion, respectively.

Microsoft Azure noted a 51% annualised growth in sales versus 44.7% expected. The American multinational doesn’t report raw numbers for its cloud-computing service. The earnings report comes only a week after Microsoft bought CloudKnox to boost Azure cloud security.

Future guidance

For fiscal 2022, experts now forecast over $63 billion in profit and about $187 billion in sales. Microsoft itself is expected to give its guidance in the earnings call scheduled for 05:30. You can listen to the company’s conference call live at this link.  

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