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IBM (IBM) Dips More Than Broader Markets: What You Should Know

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IBM (IBM - Free Report) closed the most recent trading day at $142.48, moving -0.83% from the previous trading session. This change lagged the S&P 500's 0.31% loss on the day. At the same time, the Dow lost 0.52%, and the tech-heavy Nasdaq lost 0.28%.

Heading into today, shares of the technology and consulting company had gained 8.91% over the past month, outpacing the Computer and Technology sector's gain of 2.54% and the S&P 500's gain of 2.92% in that time.

Wall Street will be looking for positivity from IBM as it approaches its next earnings report date. The company is expected to report EPS of $2.70, down 20.91% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $18.34 billion, down 2.2% from the prior-year quarter.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $12.80 per share and revenue of $77.81 billion. These results would represent year-over-year changes of -7.31% and -2.24%, respectively.

Any recent changes to analyst estimates for IBM should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Within the past 30 days, our consensus EPS projection remained stagnant. IBM is currently sporting a Zacks Rank of #4 (Sell).

Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 11.22 right now. For comparison, its industry has an average Forward P/E of 11.53, which means IBM is trading at a discount to the group.

We can also see that IBM currently has a PEG ratio of 2.24. 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. Computer - Integrated Systems stocks are, on average, holding a PEG ratio of 2.24 based on yesterday's closing prices.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 206, putting it in the bottom 20% of all 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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