IBM (IBM) closed at $124.81 in the latest trading session, marking a +1.61% move from the prior day. This change outpaced the S&P 500’s 0.54% loss on the day. Meanwhile, the Dow gained 0.97%, and the Nasdaq, a tech-heavy index, lost 2.41%.
Coming into today, shares of the technology and consulting company had gained 1.5% in the past month. In that same time, the Computer and Technology sector lost 5.55%, while the S&P 500 lost 1.04%.
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 $1.66 per share, which would represent a year-over-year decline of 9.78%. Our most recent consensus estimate is calling for quarterly revenue of $17.44 billion, down 0.73% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $11.17 per share and revenue of $74.38 billion, which would represent changes of +28.84% and +1.03%, respectively, from the prior year.
Any recent changes to analyst estimates for IBM should also be noted by investors. 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. 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.
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 currently sporting a Zacks Rank of #3 (Hold).
Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 11 right now. For comparison, its industry has an average Forward P/E of 42.44, which means IBM is trading at a discount to the group.
We can also see that IBM currently has a PEG ratio of 1.41. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. Computer – Integrated Systems stocks are, on average, holding a PEG ratio of 1.41 based on yesterday’s closing prices.
The Computer – Integrated Systems industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 210, putting it in the bottom 18% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our 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.
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