Earnings season is off to a strong start. Despite a few high-profile misses, most companies have beaten expectations. One company has had a series of better-than-expected numbers in the past year that’s about to report earnings once again.
That company is Microsoft (MSFT). The tech giant has seen explosive growth in the past year thanks to a shift to remote work during the pandemic, and analysts are expecting revenue up 17 percent this quarter.
Shares are at all-time highs, but are only up 52 percent in the past year, just a slight outperformance relative to the S&P 500.
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Yet the company’s software, services, apps, video games, and other technologies allow the company to generate a 33 percent profit margin, and both earnings and revenue posted strong returns last year.
Action to take: Shares are reasonably priced ahead of earnings, although the dividend yield is now under 0.9 percent thanks to the recent rally in shares. Over time, the company does offer a growing dividend, which combined with its usual quarterly earnings beats, should do well for long-term shareholders.
Traders would be better off with an options trade ahead of earnings for a potential pop higher. The July $275 calls, last trading for about $5.90, offer a potential mid-double-digit return if shares jump following the company’s earnings on April 27th.
Disclosure: The author of this article has no positions in the stock mentioned here, but may make a trade on this company. The author receives no compensation from any of the companies mentioned in this article.