Microsoft's Surface sales will be a key figure in its next quarter's results. Image source: Microsoft.

Microsoft (NASDAQ:MSFT) will report results for its first fiscal quarter of 2016 on Thursday, Oct. 20. With shares recently hitting 52-week highs, the earnings report comes at an important time for the stock. Can Microsoft continue to justify its pricey valuation?

Ahead of the important quarterly earnings release, here's some background on key areas worth checking in on.

What to look for

Revenue and EPS: When Microsoft reports first-quarter results in October, investors will be looking for growth in revenue and EPS. On that note, analysts have a consensus estimate for non-GAAP revenue and non-GAAP EPS of $21.71 billion and $0.68 -- up from $21.66 billion and $0.67 in the year-ago quarter, respectively. But in light of Microsoft's recent run-up in its stock price -- 19.6% in the past three months -- investors may actually be hoping the company's financial results exceed analyst expectations.

Productivity and business processes revenue: Investors should look for continued growth in Microsoft's productivity and business processes segment, which includes revenue from Office 365 and Dynamics products. As the segment contributing the most to Microsoft's operating income, it's critical Microsoft continues to prove to investors this segment can consistently deliver.

Specifically, investors should look for the segment to maintain growth similar to the 8% year-over-year constant currency revenue growth it reported last quarter. 

Revenue and intelligent cloud revenue: As another key contributor to Microsoft's operating income (contributing $2.2 billion in Q4 versus a $3 billion contribution from productivity and business processes), it's important its intelligent cloud segment continues to grow, too.

For a benchmark, this segment's revenue increased 2% in constant currency in Q4. Look for similar growth in Q1.

Personal computing revenue: While Microsoft's personal computing product segment contributes a much smaller sum of operating income ($964 million in Q4) to the company's results compared to its other segments, some investors may be looking to this segment as a potential area for future, accretive growth. In addition to including Windows sales, it includes a few wildcards, namely Xbox Live sales and the company's growing Surface business.

iPad Pro. Image source: Apple.

Surface sales will be a particularly interesting area to watch this quarter. It may highlight whether or not the product can hold its own against Apple's (NASDAQ:AAPL) nascent iPad Pro segment, which arguably competes directly with Microsoft's Surface products. Apple's iPad Pro has been proving to be a hit with customers, helping drive iPad average selling prices and iPad revenue higher in Apple's most recent quarter. Indeed, the higher prices for iPad Pro devices compared to iPad Air and iPad mini devices helped Apple's revenue in the segment increase 7% even as total iPad unit sales declined 9%. And given that Apple is still fairly new to this segment, it's not clear yet whether Apple can hurt Microsoft's Surface business.

In Q4, Microsoft's total personal computing revenue declined 2% in constant currency, weighed by a 70% year-over-year decline in phone revenue as the company de-emphasizes its phone business. But Surface revenue increased 9% in constant currency.

It's more difficult to anticipate where Microsoft's personal computing segment, or Surface sales specifically, could end up during Q1, but an update from management on the wildcard segment could provide some insight into the segment's longer-term prospects.

As Microsoft stock's recent rise and its subsequently frothy price-to-earnings ratio of about 27.5 suggest, there's a lot riding on this quarter. Microsoft will need to continue to convince investors it's developing avenues for consistent, long-term growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.