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IBM (IBM) Beats Stock Market Upswing: What Investors Need to Know

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In the latest trading session, IBM (IBM - Free Report) closed at $256.46, marking a +1.19% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.47%. On the other hand, the Dow registered a gain of 0.11%, and the technology-centric Nasdaq increased by 0.94%.

Shares of the technology and consulting company have appreciated by 5.72% over the course of the past month, outperforming the Computer and Technology sector's gain of 3.88%, and the S&P 500's gain of 2.32%.

Analysts and investors alike will be keeping a close eye on the performance of IBM in its upcoming earnings disclosure. On that day, IBM is projected to report earnings of $2.43 per share, which would represent year-over-year growth of 5.65%. At the same time, our most recent consensus estimate is projecting a revenue of $16.08 billion, reflecting a 7.44% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $11.12 per share and revenue of $66.75 billion, which would represent changes of +7.65% and +6.38%, respectively, from the prior year.

Investors should also pay attention to any latest changes in analyst estimates for IBM. These revisions typically reflect the latest short-term business trends, which can change frequently. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Currently, IBM is carrying a Zacks Rank of #2 (Buy).

Investors should also note IBM's current valuation metrics, including its Forward P/E ratio of 22.79. Its industry sports an average Forward P/E of 20.92, so one might conclude that IBM is trading at a premium comparatively.

One should further note that IBM currently holds a PEG ratio of 3.9. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computer - Integrated Systems was holding an average PEG ratio of 2.05 at yesterday's closing price.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 34, placing it within the top 14% of over 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.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.


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