3 Reasons Growth Investors Will Love Microsoft (MSFT)

Core Viewpoint - Investors are increasingly seeking growth stocks, particularly in the financial sector, to achieve above-average returns, but identifying stocks that can fulfill their growth potential is challenging due to inherent risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing a company's real growth prospects beyond traditional metrics [2] - Microsoft (MSFT) is currently highlighted as a recommended growth stock, possessing a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for investors, with double-digit growth being a strong indicator of a company's potential for stock price gains [3] - Microsoft's historical EPS growth rate stands at 15.5%, with projected EPS growth of 12.8% for the current year, surpassing the industry average of 12% [4] Group 3: Cash Flow Growth - Higher-than-average cash flow growth is essential for growth-oriented companies, allowing them to expand without relying on external funding [5] - Microsoft reports a year-over-year cash flow growth of 23.1%, significantly higher than the industry average of 8.9% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 19%, compared to the industry average of 10.5% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions correlate strongly with stock price movements, making them an important consideration for investors [7] - Recent upward revisions in Microsoft's current-year earnings estimates have increased by 0.4% over the past month [7] Group 5: Overall Assessment - Microsoft has achieved a Growth Score of B and a Zacks Rank of 2, indicating it is a solid choice for growth investors due to positive earnings estimate revisions [9]