Shares in Microsoft Corporation (MSFT) performed exceptionally well throughout the whole of the second quarter of the year, with gains of around 80% outperforming the S&P 500. The company is scheduled to report quarter earnings to 30 June 2023, on Tuesday 25 July after markets close. The consensus EPS is $2.55 compared to $2.23 in the same quarter last year.
Microsoft’s financial outlook is completely in line with the second quarter’s extraordinary performance. The current ratio as of 31 March 2023 is at 191%, showing the company is more than capable of repaying short term liabilities with the current assets in hand.
Also, the payout ratio is just short of 30%, indicating that Microsoft is withholding a substantial proportion of what could have been shareholder dividends, and is instead investing in its own growth, showing a healthy dedication to its own bright future at a time of real flux in the technology sector.
Technical analysis shows the price in bullish momentum since the beginning of March, currently above the upper of the Bollinger bands. This means that the bulls are pretty active, pushing the price to the upside and fuelling volatility. On the other hand, the price is trading well above its moving averages and in combination with the Stochastic oscillator in the extreme overbought levels, it is possible to see a correction to the downside, especially if earnings expectations are not met.
Alphabet Inc
Shares in Alphabet Inc (GOOGL) made significant gains in the second quarter of the year of around 38%, and continued that run into the first half of July. The company is poised to report earnings for the quarter ending 30 June 2023, on Tuesday 25 July after markets close. The consensus EPS is $1.32 compared to $1.21 in the same quarter last year.
The company is very well positioned financially with total assets outweighing total liabilities at a ratio of more than 3:1. Combined with a very strong current ratio of 235%, this shows Google’s parent company to be more than able of withstanding any short term economic turmoil. Investors and traders might find its current status quite an attractive prospect, and therefore a good addition to their portfolios.
Technical analysis sees the 50-day simple moving average trading well above the slower 100-day simple moving average. That would appear to validate the overall bullish momentum in the market for Alphabet shares. The Stochastic oscillator is recording overbought levels, indicating that a correction to the downside might be possible in the near short term.
If confirmed, then the first point of strong technical support could be laying around the $120 price area, mapped out between the 23.6% and 38.2% points of the daily Fibonacci retracement levels, the level where the 20-day and 50-day moving averages meet, as well as the psychological support of the round number.
