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

Zacks Equity Research

IBM (IBM) closed the most recent trading day at $134.25, moving +0.94% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.83%. Elsewhere, the Dow gained 0.93%, while the tech-heavy Nasdaq added 0.9%.

Prior to today's trading, shares of the technology and consulting company had lost 11.56% over the past month. This has lagged the Computer and Technology sector's loss of 2.06% and the S&P 500's loss of 2.38% in that time.

IBM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.93, down 14.33% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $18.30 billion, down 2.42% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.20 per share and revenue of $77.51 billion. These totals would mark changes of -4.42% and -2.62%, respectively, from last year.

Any recent changes to analyst estimates for IBM should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, 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. The Zacks Consensus EPS estimate has moved 4.97% lower within the past month. IBM is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, IBM is holding a Forward P/E ratio of 10.07. Its industry sports an average Forward P/E of 10.4, 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 2.01. 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. The Computer - Integrated Systems industry currently had an average PEG ratio of 2.01 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 163, putting it in the bottom 37% 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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