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

·3-min read

IBM (IBM) closed at $119.91 in the latest trading session, marking a +0.9% move from the prior day. This move lagged the S&P 500's daily gain of 1.17%. At the same time, the Dow added 1.87%, and the tech-heavy Nasdaq gained 0.62%.

Prior to today's trading, shares of the technology and consulting company had lost 3.86% over the past month. This has lagged the Computer and Technology sector's loss of 3.09% and the S&P 500's loss of 2.46% in that time.

Investors will be hoping for strength from IBM as it approaches its next earnings release. On that day, IBM is projected to report earnings of $3.80 per share, which would represent year-over-year growth of 83.57%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $18.98 billion, down 6.79% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.40 per share and revenue of $73.3 billion. These totals would mark changes of +19.95% and -0.44%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for IBM. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. IBM currently has a Zacks Rank of #5 (Strong Sell).

Investors should also note IBM's current valuation metrics, including its Forward P/E ratio of 11.43. This valuation marks a discount compared to its industry's average Forward P/E of 18.42.

It is also worth noting that IBM currently has a PEG ratio of 1.92. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IBM's industry had an average PEG ratio of 1.67 as of yesterday's close.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 230, which puts it in the bottom 10% 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.

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


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