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IBM (IBM) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research
The Joint Corp. (JYNT) closed the most recent trading day at $15.94, moving -1.48% from the previous trading session.

IBM (IBM) closed at $132.28 in the latest trading session, marking a -0.08% move from the prior day. This change lagged the S&P 500's daily gain of 0.16%. Elsewhere, the Dow gained 0.26%, while the tech-heavy Nasdaq added 0.29%.

Prior to today's trading, shares of the technology and consulting company had lost 4.5% over the past month. This has was narrower than the Computer and Technology sector's loss of 7.21% and lagged the S&P 500's loss of 3.66% 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 $3.06, down 0.65% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $19.11 billion, down 4.45% from the prior-year quarter.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $13.89 per share and revenue of $76.82 billion. These results would represent year-over-year changes of +0.58% and -3.49%, respectively.

Investors should also note any recent changes to analyst estimates for IBM. 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Within the past 30 days, our consensus EPS projection remained stagnant. IBM is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 9.53 right now. Its industry sports an average Forward P/E of 11.27, 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 2.41. 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 2.41 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 166, which puts it in the bottom 36% 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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