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IBM (IBM) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, IBM (IBM) closed at $131.17, marking a +0.91% move from the previous day. This move outpaced the S&P 500's daily loss of 0.32%. Elsewhere, the Dow lost 0.47%, while the tech-heavy Nasdaq lost 0.34%.

Prior to today's trading, shares of the technology and consulting company had lost 13.85% over the past month. This has lagged the Computer and Technology sector's loss of 6.27% and the S&P 500's loss of 4.64% in that time.

Wall Street will be looking for positivity from IBM as it approaches its next earnings report date. On that day, IBM is projected to report earnings of $2.85 per share, which would represent a year-over-year decline of 16.67%. Our most recent consensus estimate is calling for quarterly revenue of $18.36 billion, down 2.1% from the year-ago period.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $12.98 per share and revenue of $77.80 billion. These results would represent year-over-year changes of -6.01% and -2.25%, respectively.

It is also important to note the recent changes to analyst estimates for IBM. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 has moved 7.87% lower. IBM is currently a Zacks Rank #4 (Sell).

In terms of valuation, IBM is currently trading at a Forward P/E ratio of 10.01. This represents a discount compared to its industry's average Forward P/E of 10.44.

We can also see that IBM currently has a PEG ratio of 2. 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. Computer - Integrated Systems stocks are, on average, holding a PEG ratio of 2 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 172, putting it in the bottom 33% 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.

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


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