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IBM Corp (IBM) to Report Q1 Earnings: What's in the Cards?
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International Business Machines Corporation (IBM - Free Report) is set to report first-quarter 2017 results on Apr 18, after the closing bell. Last quarter, the company posted a positive earnings surprise of 2.45%. In the past four quarters, the company posted an average positive earnings surprise of 4.87%.
We note that IBM performed almost in line with the Zacks Computer-Integrated Systems industry in the last one year. IBM’s shares increased 12.9% as compared with the industry’s gain of 13% during the period.
Let’s see how things are shaping up for this announcement.
Factors at Play
IBM is going through a tough time, attributable to its ongoing business model transition to cloud, which is heavily time consuming. Further, sluggish IT spending, particularly on on-premises and data center hardware, along with foreign exchange volatility, remains concerns. Moreover, intensifying competition in the industry is a major headwind.
Nevertheless, IBM's strategic growth initiatives, including its cognitive solutions, cloud computing, mobile and social business are expected to drive growth.
Additionally, the company’s policy of making strategic acquisitions will lead to incremental revenues, strengthening its technology leadership and resulting in a more favorable mix of business. Moreover, growing adoption of its Watson IoT platform is likely to have a positive impact on IBM’s first-quarter top-line results.
Earnings Whispers
Our proven model does not conclusively show that IBM will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.34. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IBM carries a Zacks Rank #3. Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are few companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:
KLA-Tencor Corporation (KLAC - Free Report) , with an Earnings ESP of +2.60% and a Zacks Rank #2.
Equifax Inc. (EFX - Free Report) , with an Earnings ESP of +0.71% and a Zacks Rank #3.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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IBM Corp (IBM) to Report Q1 Earnings: What's in the Cards?
International Business Machines Corporation (IBM - Free Report) is set to report first-quarter 2017 results on Apr 18, after the closing bell. Last quarter, the company posted a positive earnings surprise of 2.45%. In the past four quarters, the company posted an average positive earnings surprise of 4.87%.
We note that IBM performed almost in line with the Zacks Computer-Integrated Systems industry in the last one year. IBM’s shares increased 12.9% as compared with the industry’s gain of 13% during the period.
Let’s see how things are shaping up for this announcement.
Factors at Play
IBM is going through a tough time, attributable to its ongoing business model transition to cloud, which is heavily time consuming. Further, sluggish IT spending, particularly on on-premises and data center hardware, along with foreign exchange volatility, remains concerns. Moreover, intensifying competition in the industry is a major headwind.
Nevertheless, IBM's strategic growth initiatives, including its cognitive solutions, cloud computing, mobile and social business are expected to drive growth.
Additionally, the company’s policy of making strategic acquisitions will lead to incremental revenues, strengthening its technology leadership and resulting in a more favorable mix of business. Moreover, growing adoption of its Watson IoT platform is likely to have a positive impact on IBM’s first-quarter top-line results.
Earnings Whispers
Our proven model does not conclusively show that IBM will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.34. Hence, the difference is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: IBM carries a Zacks Rank #3. Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are few companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:
NCR Corporation , with an Earnings ESP of +4.35%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
KLA-Tencor Corporation (KLAC - Free Report) , with an Earnings ESP of +2.60% and a Zacks Rank #2.
Equifax Inc. (EFX - Free Report) , with an Earnings ESP of +0.71% and a Zacks Rank #3.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>