Prior to today’s trading, shares of the technology and consulting company had gained 7.65% over the past month. This has outpaced the Computer and Technology sector’s gain of 3.67% and the S&P 500’s gain of 3.83% in that time.
The company is expected to report EPS of $2.25, up 3.21% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $18.24 billion, up 0.66% from the year-ago period.
IBM’s full-year Zacks Consensus Estimates are calling for earnings of $10.86 per share and revenue of $74.23 billion. These results would represent year-over-year changes of +25.26% and +0.82%, respectively.
Any recent changes to analyst estimates for IBM should also be noted by investors. Recent revisions tend to reflect the latest near-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. 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.
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 has moved 2.72% lower. IBM currently has a Zacks Rank of #3 (Hold).
Valuation is also important, so investors should note that IBM has a Forward P/E ratio of 13.39 right now. Its industry sports an average Forward P/E of 30.32, so we one might conclude that IBM is trading at a discount comparatively.
We can also see that IBM currently has a PEG ratio of 1.66. 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 1.84 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 175, putting it in the bottom 32% 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.