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IBM (IBM) Dips More Than Broader Markets: What You Should Know

·3 min read

In the latest trading session, IBM (IBM) closed at $128.45, marking a -0.87% move from the previous day. This change lagged the S&P 500's 0.78% loss on the day. Meanwhile, the Dow lost 0.88%, and the Nasdaq, a tech-heavy index, lost 0.26%.

Coming into today, shares of the technology and consulting company had lost 1.69% in the past month. In that same time, the Computer and Technology sector lost 4.58%, while the S&P 500 lost 3.4%.

IBM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.88, down 25.4% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.75 billion, down 21.96% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.47 per share and revenue of $59.9 billion, which would represent changes of +19.42% and -15.38%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for IBM. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. IBM is holding a Zacks Rank of #4 (Sell) right now.

Digging into valuation, IBM currently has a Forward P/E ratio of 13.69. For comparison, its industry has an average Forward P/E of 13.69, which means IBM is trading at a no noticeable deviation to the group.

It is also worth noting that IBM currently has a PEG ratio of 1.96. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Integrated Systems was holding an average PEG ratio of 1.8 at yesterday's closing price.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 191, which puts it in the bottom 25% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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