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Will Marginally Higher Revenues Benefit IBM's Q1 Earnings?
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International Business Machines Corporation (IBM - Free Report) is scheduled to report first-quarter 2023 results on Apr 19, after the closing bell. In the last reported quarter, the New York-based integrated systems provider missed the Zacks Consensus Estimate by a penny. The company is expected to have recorded higher aggregate revenues year over year despite a challenging macroeconomic environment and softness in traditional businesses.
Factors at Play
During the first quarter, IBM expanded its Client Innovation Center by launching its second Japan Innovation Hub in Cebu City, Philippines. The new hub will be manned by a Filipino workforce with specialized skillsets in data analytics, AI, hybrid cloud transformation, application management, supply chain, finance and procurement. Leveraging AI, ML and automation techniques, it combines human expertise and advanced technologies for faster response, efficiency and transparency through a holistic approach to secure hybrid cloud environments. These are likely to have driven the top-line growth in the Software segment.
During the quarter, IBM was selected as a technology partner by Telecom Egypt (TE) to modernize and transform network operations in the Middle Eastern country. With the aid of IBM Cloud Pak for Watson AIOps, TE will have a comprehensive overview of its IT ecosystem, enabling greater management and control of the nationwide IT operations. IBM Robotic Process Automation will also help automate the tracking of service quality and network capacity. These automation solutions will greatly increase operational effectiveness, guarantee fast and superior service to end consumers and accelerate the nation's digital growth. These are likely to have generated incremental revenues in the Consulting segment.
During the to-be-reported quarter, IBM also launched Quantum Computational Center in collaboration with Fundación Ikerbasque in the Basque Country of Spain. This is the second such facility established in Europe. The collaboration aims to enhance international research and industrial cooperation and construct a world-class quantum-trained community pool with comprehensive learning programs. Such state-of-the-art products are likely to have translated into higher revenues in the Infrastructure segment.
However, escalating expenses toward cloud platform development amid intense competition in the cloud space are likely to have eroded its margins. In addition, the company is expected to have recorded adverse currency translation effects, likely impacting its bottom line.
The Zacks Consensus Estimate for total revenues for the company stands at $14,286 million. It generated revenues of $14,197 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.27 per share, indicating a decline from $1.40 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Corning Incorporated (GLW - Free Report) is +3.71% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Apr 25.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.60% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.
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Will Marginally Higher Revenues Benefit IBM's Q1 Earnings?
International Business Machines Corporation (IBM - Free Report) is scheduled to report first-quarter 2023 results on Apr 19, after the closing bell. In the last reported quarter, the New York-based integrated systems provider missed the Zacks Consensus Estimate by a penny. The company is expected to have recorded higher aggregate revenues year over year despite a challenging macroeconomic environment and softness in traditional businesses.
Factors at Play
During the first quarter, IBM expanded its Client Innovation Center by launching its second Japan Innovation Hub in Cebu City, Philippines. The new hub will be manned by a Filipino workforce with specialized skillsets in data analytics, AI, hybrid cloud transformation, application management, supply chain, finance and procurement. Leveraging AI, ML and automation techniques, it combines human expertise and advanced technologies for faster response, efficiency and transparency through a holistic approach to secure hybrid cloud environments. These are likely to have driven the top-line growth in the Software segment.
During the quarter, IBM was selected as a technology partner by Telecom Egypt (TE) to modernize and transform network operations in the Middle Eastern country. With the aid of IBM Cloud Pak for Watson AIOps, TE will have a comprehensive overview of its IT ecosystem, enabling greater management and control of the nationwide IT operations. IBM Robotic Process Automation will also help automate the tracking of service quality and network capacity. These automation solutions will greatly increase operational effectiveness, guarantee fast and superior service to end consumers and accelerate the nation's digital growth. These are likely to have generated incremental revenues in the Consulting segment.
During the to-be-reported quarter, IBM also launched Quantum Computational Center in collaboration with Fundación Ikerbasque in the Basque Country of Spain. This is the second such facility established in Europe. The collaboration aims to enhance international research and industrial cooperation and construct a world-class quantum-trained community pool with comprehensive learning programs. Such state-of-the-art products are likely to have translated into higher revenues in the Infrastructure segment.
However, escalating expenses toward cloud platform development amid intense competition in the cloud space are likely to have eroded its margins. In addition, the company is expected to have recorded adverse currency translation effects, likely impacting its bottom line.
The Zacks Consensus Estimate for total revenues for the company stands at $14,286 million. It generated revenues of $14,197 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.27 per share, indicating a decline from $1.40 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Zacks Rank: IBM currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Verizon Communications Inc. (VZ - Free Report) is set to release quarterly numbers on Apr 25. It has an Earnings ESP of +0.63% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Corning Incorporated (GLW - Free Report) is +3.71% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Apr 25.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.60% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on Apr 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.