IBM (IBM) ended the recent trading session at $329.23, demonstrating a +2.75% change from the preceding day’s closing price. The stock exceeded the S&P 500, which registered a gain of 0.13% for the day. Meanwhile, the Dow experienced a rise of 0.45%, and the technology-dominated Nasdaq saw an increase of 0.03%.
Prior to today’s trading, shares of the technology and consulting company had gained 39.63% outpaced the Computer and Technology sector’s gain of 11.37% and the S&P 500’s gain of 5.25%.
Analysts and investors alike will be keeping a close eye on the performance of IBM in its upcoming earnings disclosure. The company’s upcoming EPS is projected at $2.95, signifying a 5.36% increase compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $17.86 billion, up 5.2% from the year-ago period.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $12.4 per share and revenue of $71.56 billion. These totals would mark changes of +6.99% and +5.97%, respectively, from last year.
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. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, there’s been a 0.1% rise in the Zacks Consensus EPS estimate. At present, IBM boasts a Zacks Rank of #3 (Hold).
With respect to valuation, IBM is currently being traded at a Forward P/E ratio of 25.85. Its industry sports an average Forward P/E of 28.94, so one might conclude that IBM is trading at a discount comparatively.
Investors should also note that IBM has a PEG ratio of 3.32 right now. 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. The average PEG ratio for the Computer – Integrated Systems industry stood at 1.14 at the close of the market yesterday.
