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IBM (IBM) Exceeds Market Returns: Some Facts to Consider

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IBM (IBM - Free Report) closed the latest trading day at $185.72, indicating a +0.82% change from the previous session's end. The stock outpaced the S&P 500's daily gain of 0.04%. Meanwhile, the Dow experienced a rise of 0.16%, and the technology-dominated Nasdaq saw a decrease of 0.28%.

Shares of the technology and consulting company have depreciated by 3.27% over the course of the past month, underperforming the Computer and Technology sector's gain of 4.78% and the S&P 500's gain of 5.01%.

Investors will be eagerly watching for the performance of IBM in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $1.59, marking a 16.91% rise compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $14.56 billion, showing a 2.18% escalation compared to the year-ago quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $10.06 per share and revenue of $63.79 billion, indicating changes of +4.57% and +3.12%, respectively, compared to the previous year.

It is also important to note the recent changes to analyst estimates for IBM. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 2.16% higher within the past month. As of now, IBM holds a Zacks Rank of #2 (Buy).

Digging into valuation, IBM currently has a Forward P/E ratio of 18.3. This signifies a premium in comparison to the average Forward P/E of 17.78 for its industry.

Also, we should mention that IBM has a PEG ratio of 3.61. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. As the market closed yesterday, the Computer - Integrated Systems industry was having an average PEG ratio of 2.85.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 175, placing it within the bottom 31% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply to follow these and more stock-moving metrics during the upcoming trading sessions.

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