140.08 -0.77 (-0.55%)
Pre-Market: 5:13AM EDT
|Bid||140.29 x 800|
|Ask||140.85 x 800|
|Day's Range||139.08 - 141.54|
|52 Week Range||137.45 - 171.13|
|Beta (3Y Monthly)||1.03|
|PE Ratio (TTM)||22.69|
|Forward Dividend & Yield||6.28 (4.52%)|
|1y Target Est||N/A|
International Business Machines Corp.’s artificial intelligence product Watson appears to be losing ground to competitors and investors will likely focus on how that’s affecting the tech giant’s cognitive-solutions business when it reports earnings next week.
is expected to report earnings of 62 cents a share on sales of $22.6 billion on Oct. 15, based on a FactSet survey of 23 analysts. The stock has fallen 4.4% since the company last reported earnings on Jul. 16. Quarterly estimates have fallen 1.3 cent a share in the past month.
CNBC's Jim Cramer clues investors in to what he'll be watching in the week ahead as stocks try to recover from a dramatic sell-off. The "Mad Money" host has his eye on earnings from Bank of America, Netflix and more. Friday's volatile trading session may have helped stocks pare their losses from earlier in the week, but CNBC's Jim Cramer said it would take more than a market rally in China to mount a sustainable recovery.
Tech stocks were rebounding in morning trading Friday after suffering a brutal two-day stretch of selling. Will next week's tech earnings reports help inspire more rebounds?
Amazon (AMZN) is due to report its third-quarter results at a time when calls have continued for the company to consider splitting itself up by spinning off its cloud computing business. Last month, Citi Research issued a note in which it said that Amazon’s separating its retail and cloud businesses could help it avoid being subjected to intense regulatory scrutiny. Some politicians, including President Donald Trump, believe Amazon’s success has come at the expense of other companies.
Throughout most of 2018, it has seemed like corporate earnings reports have been the only thing keeping the stock market from disaster. Each successive earnings calendar has shown better news, allowing stocks to rally amid the chaos. Markets were rattled this week, with the Nasdaq Composite dropping 4% on Wednesday, and broad indices declining again on Thursday.
After a forgettable first half of the year, IBM stock delivered some promising momentum in the second half. On Wednesday, when the Dow Jones Industrial Average lost nearly 832 points, the IBM stock price lost 3% of its value. While other companies have suffered steeper declines on paper, including sexier competitors like Microsoft (NASDAQ:MSFT) and especially Amazon (NASDAQ:AMZN), the problem for IBM stock is future viability, or lack thereof.
IBM announced yesterday that it has filed a formal protest with the U.S. Government Accountability Office over the structure of the Pentagon's winner-take-all $10 billion, 10-year JEDI cloud contract. The protest came just a day before the bidding process is scheduled to close. Just about every vendor short of Amazon, which has remained mostly quiet, has been complaining about this strategy.
As of October 9, the analysts from different brokerage firms that track IBM (IBM) stock provided ratings. Of the 24 analysts covering the stock, nine recommended a “buy,” 12 recommended a “hold,” and two recommended a “sell.” One analyst provided an “overweight” recommendation.
IBM (IBM) seems to be heading in the right direction to achieve its annual FCF (free cash flow) target of $12 billion. At the end of the second quarter, the company generated a FCF of $3.2 billion on a cumulative basis—compared to $3.6 billion in the same period last year. In 2017, IBM’s FCF was $13 billion. In the last five years, the company maintained an annual run rate of ~$13 billion. Based on IBM’s past historical trends, its FCF target of $12 billion in 2018 could be achieved. Even IBM’s capex-to-sales ratio is low at 4.3%.
The tech giant appears to have turned the corner, but with asterisks beside each of its last three earnings, doubts remain.
IBM’s (IBM) international revenues, which include the EMEA (Europe, Middle East, and Africa) and Asia-Pacific regions, continue to generate strong business. On a combined basis, both of the regions contribute ~53% of IBM’s overall revenues.
According to GuruFocus' list of 52-week lows, these Guru stocks have reached their 52-week lows. The price of Facebook Inc. (FB) shares has declined to close to the 52-week low of $151.38, which is 31.8% off the 52-week high of $218.62. The company has a market cap of $437.07 billion.
Investors are being spooked by the combination of rising long-term interest rates, weakness in emerging-market currencies (especially the Chinese yuan) and evidence that higher interest rates are starting to take a bite out of consumer demand for things like houses and automobiles. When the company last reported on July 17, earnings of $5.98 per share beat estimates by $1.33 on a 19.2% rise in revenues.
IBM (IBM) has witnessed a double-digit operating margin trend in the last five quarters. During this period, IBM maintained an average operating margin of nearly 17% each quarter. The company’s operating profit in the second quarter was $3.4 billion—up 11% YoY (year-over-year). The operating margin for the same quarter was 16.9%—compared to 15.9% in the first quarter of 2017. In the following graph, you can see IBM’s operating margin trend in the last five quarters.
IBM's third-quarter results are expected to benefit from robust adoption of z14 Mainframe. However investments on the development of IBM Cloud might limit margin expansion.
This year has been rewarding for shareholders of business technology titans like Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA). Microsoft stock is up 36% year-to-date, largely driven by its growing cloud computing lineup, while Nvidia has gained 33% on its deeper penetration of the AI hardware market. IBM stock is down 4% since the end of last year.
Analysts expect IBM’s (IBM) revenues to be ~$19.1 billion in the third quarter, which reflects a decline of 0.2% YoY (year-over-year). However, IBM’s total revenues in the second quarter improved 3.9% YoY to ~$20 billion. In the following graph, you can see IBM’s overall revenue trend in the last five quarters. During this period, IBM grew at a compound annual growth rate of 1%.
In yesterday’s trading, leading technology giant Microsoft (MSFT) fell 5.43%, which was one of its highest declines in the last year. In the graph below, you can see Microsoft’s stock movement compared to its peers. The overall US market is bleeding red, driven by rising interest rates.
IBM (IBM) is expected to report its third-quarter financial results on October 16. Analysts expect IBM’s third-quarter EPS to be $3.4. The company’s total EPS for the last nine months should be ~$8.93. In order to meet its 2018 EPS target, IBM will be left with only $4.87 to be achieved in its final quarter.