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

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In the latest trading session, IBM (IBM - Free Report) closed at $131.47, marking a +0.09% move from the previous day. This move lagged the S&P 500's daily gain of 0.71%. Elsewhere, the Dow gained 0.27%, while the tech-heavy Nasdaq added 0.33%.

Coming into today, shares of the technology and consulting company had gained 5.77% in the past month. In that same time, the Computer and Technology sector gained 2.62%, while the S&P 500 gained 3.76%.

Investors will be hoping for strength from IBM as it approaches its next earnings release, which is expected to be April 19, 2022. The company is expected to report EPS of $1.35, down 23.73% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.81 billion, down 22.09% from the year-ago period.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $10.09 per share and revenue of $60.55 billion. These results would represent year-over-year changes of +27.24% and -14.46%, respectively.

Investors might also notice recent changes to analyst estimates for IBM. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. IBM is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 13.02 right now. For comparison, its industry has an average Forward P/E of 16.51, which means IBM is trading at a discount to the group.

We can also see that IBM currently has a PEG ratio of 1.21. 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 210, which puts it in the bottom 18% 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.

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


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