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

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Zacks Equity Research
·3 min read
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IBM (IBM) closed at $134.93 in the latest trading session, marking a +0.53% move from the prior day. This change outpaced the S&P 500's 0.15% gain on the day.

Prior to today's trading, shares of the technology and consulting company had gained 8.91% over the past month. This has outpaced the Computer and Technology sector's gain of 5.14% and the S&P 500's gain of 6.19% 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 $1.66, down 9.78% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $17.44 billion, down 0.73% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.17 per share and revenue of $74.38 billion. These totals would mark changes of +28.84% and +1.03%, respectively, from last 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 a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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. Within the past 30 days, our consensus EPS projection remained stagnant. IBM is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, IBM is holding a Forward P/E ratio of 12.17. Its industry sports an average Forward P/E of 28.45, so we one might conclude that IBM is trading at a discount comparatively.

Also, we should mention that IBM has a PEG ratio of 1.56. 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. IBM's industry had an average PEG ratio of 1.56 as of yesterday's close.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 191, which puts it in the bottom 25% 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.

To follow IBM in the coming trading sessions, be sure to utilize Zacks.com.


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