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IBM (IBM) Gains But Lags Market: What You Should Know

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In the latest trading session, IBM (IBM) closed at $138.08, marking a +0.33% move from the previous day. This change lagged the S&P 500's 0.36% gain on the day. Elsewhere, the Dow gained 0.23%, while the tech-heavy Nasdaq lost 0.1%.

Heading into today, shares of the technology and consulting company had lost 3.61% over the past month, outpacing the Computer and Technology sector's loss of 6.98% and the S&P 500's loss of 6.59% in that time.

Investors will be hoping for strength from IBM as it approaches its next earnings release. In that report, analysts expect IBM to post earnings of $2.28 per share. This would mark a year-over-year decline of 2.15%. Our most recent consensus estimate is calling for quarterly revenue of $15.06 billion, down 19.68% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.89 per share and revenue of $60.99 billion, which would represent changes of +24.72% and -13.84%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for IBM. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. IBM is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 13.92 right now. This valuation marks a discount compared to its industry's average Forward P/E of 31.22.

Meanwhile, IBM's PEG ratio is currently 1.54. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computer - Integrated Systems was holding an average PEG ratio of 1.54 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 165, which puts it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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