What to Expect When Microsoft Reports After the Close

Technology

Published: October 24, 2018 10:20 am

Last Updated: January 11, 2020 3:55 pm

Microsoft Corp. (NASDAQ: MSFT) is scheduled to release its fiscal first-quarter financial results after the markets close on Wednesday. The consensus estimates call for $0.96 in earnings per share (EPS) and $27.9 billion in revenue. In the same period of last year, the company posted EPS of $0.84 and $24.54 billion in revenue.

The tech giant was hardly given much attention for announcing a dividend hike in mid-September. This hike was much more relevant than just as it pertains to Microsoft. It will keep the pressure on other technology giants to raise their dividends as well.

Still, should this dividend hike be considered a disappointment? The company’s meteoric stock gains over the past two years may play a partial role here in why investors haven’t been applauding even more than they should have been.

Microsoft’s board of directors declared a quarterly dividend of $0.46 per share, and the $0.04 per share gain represents a dividend hike of 9.5%. To put this in perspective, Microsoft’s yield as of the $113.21 closing price on the prior day (9/18) was 1.5%. The current dividend yield compared to the most recent closing price of $108.10 is now looking to be 1.68% or so, with a $1.84 per share annualized dividend payment.

As far as why this matters, Microsoft’s shares would have a far higher yield had its stock price not risen so much in 2018 and 2017. On a dividend-adjusted basis, Microsoft shares were up 78% since the first trading day of 2017, and the stock was last seen trading up 26% so far in 2018. Another consideration about the dividend and the share price gains is that Microsoft is currently worth more than $820 billion, putting the tech giant within striking range of having a $1 trillion market cap.

A few analysts weighed in on Microsoft ahead of the report:

Merrill Lynch has a Buy rating with a $135 price target.
Oppenheimer has a Buy rating and a $127 price target.
Wedbush rates it Outperform with a $140 price target.
Credit Suisse’s Buy rating comes with a $125 target.
DZ Bank has a Buy rating.
Macquarie has a Buy rating.

Shares of Microsoft were last seen trading at $106.82, with a consensus analyst price target of $124.53 and a 52-week trading range of $78.01 to $116.18.