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IBM (IBM) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

IBM (IBM) closed the most recent trading day at $139.75, moving -1.38% from the previous trading session. This change lagged the S&P 500's daily loss of 0.38%. At the same time, the Dow lost 0.46%, and the tech-heavy Nasdaq gained 0.17%.

Prior to today's trading, shares of the technology and consulting company had gained 1.55% over the past month. This has outpaced the Computer and Technology sector's loss of 5.23% and the S&P 500's loss of 4.88% in that time.

Wall Street will be looking for positivity from IBM as it approaches its next earnings report date. On that day, IBM is projected to report earnings of $1.95 per share, which would represent a year-over-year decline of 13.33%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $18.25 billion, up 0.39% from the year-ago period.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $13.36 per share and revenue of $78.61 billion. These results would represent year-over-year changes of +4.29% and +1.89%, respectively.

Investors might also notice recent changes to analyst estimates for IBM. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.21% higher. IBM is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, IBM is currently trading at a Forward P/E ratio of 10.61. This represents a premium compared to its industry's average Forward P/E of 9.92.

Meanwhile, IBM's PEG ratio is currently 1.94. 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 1.51 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 112, which puts it in the top 44% 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.

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


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