Back to top

Image: Bigstock

IBM (IBM) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

In the latest trading session, IBM (IBM - Free Report) closed at $120.77, marking a +0.85% move from the previous day. This move lagged the S&P 500's daily gain of 1.54%. Meanwhile, the Dow gained 0.85%, and the Nasdaq, a tech-heavy index, added 1.87%.

Heading into today, shares of the technology and consulting company had lost 4.12% over the past month, lagging the Computer and Technology sector's gain of 3.97% and the S&P 500's gain of 0.57% in that time.

IBM will be looking to display strength as it nears its next earnings release. On that day, IBM is projected to report earnings of $1.78 per share, which would represent a year-over-year decline of 43.85%. Meanwhile, our latest consensus estimate is calling for revenue of $17.72 billion, down 7.52% from the prior-year quarter.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $11.29 per share and revenue of $72.98 billion. These results would represent year-over-year changes of -11.87% and -5.4%, respectively.

It is also important to note the recent changes to analyst estimates for IBM. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. IBM currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, IBM is holding a Forward P/E ratio of 10.61. Its industry sports an average Forward P/E of 12.57, so we one might conclude that IBM is trading at a discount comparatively.

Investors should also note that IBM has a PEG ratio of 3.11 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Computer - Integrated Systems stocks are, on average, holding a PEG ratio of 3.11 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 168, putting it in the bottom 34% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


International Business Machines Corporation (IBM) - free report >>

Published in