In the latest trading session, IBM (IBM) closed at $143.64, marking a -1.22% move from the previous day. This change was narrower than the S&P 500’s daily loss of 1.23%. Meanwhile, the Dow lost 1.28%, and the Nasdaq, a tech-heavy index, lost 1.13%.
Prior to today’s trading, shares of the technology and consulting company had gained 7.3% over the past month. This has outpaced the Computer and Technology sector’s gain of 1.53% and the S&P 500’s gain of 1.95% in that time.
Investors will be hoping for strength from IBM as it approaches its next earnings release. The company is expected to report EPS of $2.66, down 22.22% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $18.33 billion, down 2.27% from the prior-year quarter.
IBM’s full-year Zacks Consensus Estimates are calling for earnings of $12.80 per share and revenue of $77.79 billion. These results would represent year-over-year changes of -7.31% and -2.26%, respectively.
It is also important to note the recent changes to analyst estimates for IBM. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. IBM is currently a Zacks Rank #3 (Hold).
Looking at its valuation, IBM is holding a Forward P/E ratio of 11.36. This represents a premium compared to its industry’s average Forward P/E of 11.28.
It is also worth noting that IBM currently has a PEG ratio of 2.27. 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 1.8 at yesterday’s closing price.
The Computer – Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 118, which puts it in the top 47% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual 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.
To follow IBM in the coming trading sessions, be sure to utilize Zacks.com.
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