Is a Breakout for Microsoft (MSFT) in the Charts?

Microsoft Corp. (MSFT) is known for its Windows operating systems and Office productivity suite. The firm dominates the PC software market with more than an 80% market share for operating systems. It also designs and sells PCs, tablets, gaming and entertainment consoles and its Azure cloud-based solutions provide customers with software and services…

Microsoft’s (MSFT) Azure cloud solution has been benefiting from an acceleration in the global digital transformation. In addition, its Teams’ offering has grown due to a continuation of remote work and an adoption of the hybrid/flexible work model. Plus, the recovery in the job market has boosted LinkedIn revenues.

MSFT has a current ratio of 2.1, which indicates it has more than enough liquidity to handle short-term obligations. The company also has a low debt-to-equity ratio of 0.5. This has led to a Quality Grade of B in our POWR Ratings system. Earnings per share have grown an average of 49% per year over the past three years.

The stock appears a bit overvalued with a forward P/E ratio of 32.36. MSFT had been showing bullish momentum from June through the end of August. After negative performance in September, the stock has reversed course as shown in the chart below.

Take a look at the 1-year chart of MSFT below with added notations…

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