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

Zacks Equity Research
·3 mins read

In the latest trading session, IBM (IBM) closed at $122.01, marking a +1.19% move from the previous day. This move lagged the S&P 500's daily gain of 1.8%. At the same time, the Dow added 1.68%, and the tech-heavy Nasdaq gained 2.33%.

Coming into today, shares of the technology and consulting company had lost 3.12% in the past month. In that same time, the Computer and Technology sector lost 9.14%, while the S&P 500 lost 6.31%.

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 $2.55 per share. This would mark a year-over-year decline of 4.85%. Meanwhile, our latest consensus estimate is calling for revenue of $17.61 billion, down 2.3% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.06 per share and revenue of $73.66 billion, which would represent changes of -13.66% and -4.52%, respectively, from the prior year.

Any recent changes to analyst estimates for IBM should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. IBM is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, IBM is currently trading at a Forward P/E ratio of 10.9. This represents a discount compared to its industry's average Forward P/E of 19.72.

Also, we should mention that IBM has a PEG ratio of 3.32. 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. Computer - Integrated Systems stocks are, on average, holding a PEG ratio of 2.48 based on yesterday's closing prices.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 72, putting it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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