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

Zacks Equity Research
·3 min read

In the latest trading session, IBM (IBM) closed at $124.20, marking a -0.18% move from the previous day. This change lagged the S&P 500's daily loss of 0.16%. Meanwhile, the Dow lost 0.58%, and the Nasdaq, a tech-heavy index, added 0.48%.

Prior to today's trading, shares of the technology and consulting company had gained 12.54% over the past month. This has outpaced the Computer and Technology sector's gain of 3.69% and the S&P 500's gain of 5.06% in that time.

Investors will be hoping for strength from IBM as it approaches its next earnings release. The company is expected to report EPS of $1.76, down 62.63% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $20.53 billion, down 5.7% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.78 per share and revenue of $73.81 billion, which would represent changes of -31.46% and -4.33%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for IBM. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, 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. Within the past 30 days, our consensus EPS projection has moved 4.06% lower. IBM is holding a Zacks Rank of #4 (Sell) right now.

Looking at its valuation, IBM is holding a Forward P/E ratio of 14.18. For comparison, its industry has an average Forward P/E of 23.88, which means IBM is trading at a discount to the group.

Meanwhile, IBM's PEG ratio is currently 4.32. 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. Computer - Integrated Systems stocks are, on average, holding a PEG ratio of 2.09 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 179, putting it in the bottom 30% 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.

To follow IBM in the coming trading sessions, be sure to utilize Zacks.com.


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