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

Zacks Equity Research

In the latest trading session, IBM (IBM) closed at $134.95, marking a -0.15% move from the previous day. This move lagged the S&P 500's daily gain of 0.09%. At the same time, the Dow added 0.09%, and the tech-heavy Nasdaq gained 0.62%.

Heading into today, shares of the technology and consulting company had lost 0.54% over the past month, lagging the Computer and Technology sector's gain of 0.35% and the S&P 500's gain of 2.08% in that time.

Investors will be hoping for strength from IBM as it approaches its next earnings release. On that day, IBM is projected to report earnings of $3.06 per share, which would represent a year-over-year decline of 0.65%. Our most recent consensus estimate is calling for quarterly revenue of $19.11 billion, down 4.45% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $13.89 per share and revenue of $76.82 billion, which would represent changes of +0.58% and -3.49%, respectively, from the prior year.

Any recent changes to analyst estimates for IBM should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. IBM is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, IBM currently has a Forward P/E ratio of 9.73. Its industry sports an average Forward P/E of 10.5, so we one might conclude that IBM is trading at a discount comparatively.

We can also see that IBM currently has a PEG ratio of 2.46. 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. IBM's industry had an average PEG ratio of 2.46 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 199, putting it in the bottom 23% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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