Back to top

Image: Bigstock

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

Read MoreHide Full Article

IBM (IBM - Free Report) closed the most recent trading day at $120.74, moving +1.52% from the previous trading session. The stock lagged the S&P 500's daily gain of 2.38%. Elsewhere, the Dow gained 1.95%, while the tech-heavy Nasdaq added 3.01%.

Coming into today, shares of the technology and consulting company had lost 0.96% in the past month. In that same time, the Computer and Technology sector lost 1.35%, while the S&P 500 lost 0.91%.

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 $1.66 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.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $11.17 per share and revenue of $74.38 billion. These results would represent year-over-year changes of +28.84% and +1.03%, respectively.

Any recent changes to analyst estimates for IBM should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. IBM is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 10.65 right now. Its industry sports an average Forward P/E of 40.32, 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 1.36. 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. The Computer - Integrated Systems was holding an average PEG ratio of 1.36 at yesterday's closing price.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 205, which puts it in the bottom 20% 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.

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


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


International Business Machines Corporation (IBM) - free report >>

Published in