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

Zacks Equity Research
·3 min read

IBM (IBM) closed at $123.61 in the latest trading session, marking a +0.18% move from the prior day. This change outpaced the S&P 500's 0.21% loss on the day. Meanwhile, the Dow lost 0.67%, and the Nasdaq, a tech-heavy index, added 0.51%.

Heading into today, shares of the technology and consulting company had gained 2.75% over the past month, lagging the Computer and Technology sector's gain of 6.68% and the S&P 500's gain of 4% in that time.

Investors will be hoping for strength from IBM as it approaches its next earnings release. On that day, IBM is projected to report earnings of $1.77 per share, which would represent a year-over-year decline of 62.42%. Our most recent consensus estimate is calling for quarterly revenue of $20.48 billion, down 5.95% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.73 per share and revenue of $73.77 billion. These totals would mark changes of -31.85% and -4.38%, respectively, from last 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. 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. 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. Within the past 30 days, our consensus EPS projection has moved 0.55% lower. IBM currently has a Zacks Rank of #4 (Sell).

Looking at its valuation, IBM is holding a Forward P/E ratio of 14.14. For comparison, its industry has an average Forward P/E of 27.61, which means IBM is trading at a discount to the group.

Also, we should mention that IBM has a PEG ratio of 4.31. 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 industry currently had an average PEG ratio of 2.33 as of yesterday's close.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 205, putting it in the bottom 20% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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Zacks Investment Research