NEW YORK (TheStreet) -- Microsoft (MSFT - Get Report) was gaining 2.7% to $40.95 in after-hours trading Thursday after beating analysts' expectations for earnings and revenue in the fiscal third quarter.
The software maker reported earnings of 68 cents a share, beating the FactSet estimate of 63 cents a share by 5 cents. The company reported revenue of $20.40 billion, down 0.4% from $20.49 in the year-ago quarter. Analysts surveyed by FactSet expected revenue of $20.39 billion for the quarter.
Revenue from software sold to companies grew 7% to $12.23 billion in the quarter, while revenue from sales of products to consumers rose 12% to $8.3 billion.
"This quarter's results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world," CEO Satya Nadella said in a press release. "We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth."
TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICROSOFT CORP (MSFT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MSFT's revenue growth has slightly outpaced the industry average of 11.6%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although MSFT's debt-to-equity ratio of 0.27 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 2.96, which clearly demonstrates the ability to cover short-term cash needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Software industry and the overall market, MICROSOFT CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.45% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MSFT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- You can view the full analysis from the report here: MSFT Ratings Report