What Are Analysts Saying About The Future Of International Business Machines Corporation’s (NYSE:IBM)?
After International Business Machines Corporation’s (NYSE:IBM) earnings announcement in June 2018, analysts seem extremely confident, as a 89.4% rise in profits is expected in the upcoming year, relative to the historical 5-year average growth rate of -16.7%. Currently with trailing-twelve-month earnings of US$5.75b, we can expect this to reach US$10.89b by 2019. Below is a brief commentary around International Business Machines’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
View our latest analysis for International Business Machines
What can we expect from International Business Machines in the longer term?
Over the next three years, it seems the consensus view of the 22 analysts covering IBM is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of IBM’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$5.76b and the final forecast of US$11.00b by 2021, the annual rate of growth for IBM’s earnings is 2.7%. EPS reaches $12.36 in the final year of forecast compared to the current $6.17 EPS today. Earnings growth appears to be a result of cost cutting activities, as revenues is expected to grow much slower than earnings. With a current profit margin of 7.3%, this movement will result in a margin of 13.8% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For International Business Machines, there are three essential factors you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is International Business Machines worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether International Business Machines is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of International Business Machines? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
