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IBM (IBM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

IBM (IBM) closed at $136.32 in the latest trading session, marking a +1.66% move from the prior day. This move outpaced the S&P 500's daily gain of 1.08%. At the same time, the Dow added 0.91%, and the tech-heavy Nasdaq gained 1.31%.

Prior to today's trading, shares of the technology and consulting company had lost 4.71% over the past month. This has lagged the Computer and Technology sector's loss of 1.68% and the S&P 500's loss of 0.68% in that time.

Investors will be hoping for strength from IBM as it approaches its next earnings release. The company is expected to report EPS of $2.71, down 20.76% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $18.34 billion, down 2.2% from the year-ago period.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $12.80 per share and revenue of $77.81 billion. These results would represent year-over-year changes of -7.31% and -2.24%, respectively.

Investors should also note any recent changes to analyst estimates for IBM. These revisions help to show the ever-changing nature of near-term business trends. 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. 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 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 #4 (Sell).

Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 10.48 right now. Its industry sports an average Forward P/E of 10.74, so we one might conclude that IBM is trading at a discount comparatively.

It is also worth noting that IBM currently has a PEG ratio of 2.1. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Computer - Integrated Systems stocks are, on average, holding a PEG ratio of 2.1 based on yesterday's closing prices.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 196, which puts it in the bottom 24% 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.

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


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