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IBM (IBM) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3-min read

IBM (IBM) closed at $120.51 in the latest trading session, marking a +0.22% move from the prior day. This move lagged the S&P 500's daily gain of 1.05%. At the same time, the Dow added 0.52%, and the tech-heavy Nasdaq gained 1.72%.

Coming into today, shares of the technology and consulting company had lost 4.32% in the past month. In that same time, the Computer and Technology sector lost 4.28%, while the S&P 500 lost 3.29%.

Wall Street will be looking for positivity from IBM as it approaches its next earnings report date. In that report, analysts expect IBM to post earnings of $2.55 per share. This would mark a year-over-year decline of 4.85%. Our most recent consensus estimate is calling for quarterly revenue of $17.61 billion, down 2.3% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $11.06 per share and revenue of $73.66 billion. These totals would mark changes of -13.66% and -4.52%, respectively, from last year.

It is also important to note the 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. IBM is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note IBM's current valuation metrics, including its Forward P/E ratio of 10.87. This represents a discount compared to its industry's average Forward P/E of 19.03.

Meanwhile, IBM's PEG ratio is currently 3.31. 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 2.55 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 105, putting it in the top 42% 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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