Why IBM (IBM) Outpaced the Stock Market Today

In the latest close session, IBM (IBM) was up +2.76% at $248.44. The stock outperformed the S&P 500, which registered a daily gain of 1.15%. At the same time, the Dow added 1.38%, and the tech-heavy Nasdaq gained 1.38%.

Prior to today's trading, shares of the technology and consulting company had lost 5.98% lagged the Computer and Technology sector's loss of 5.27% and the S&P 500's loss of 5.69%.

The investment community will be closely monitoring the performance of IBM in its forthcoming earnings report. The company's upcoming EPS is projected at $1.78, signifying a 11.25% increase compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $15.56 billion, reflecting a 7.04% rise from the equivalent quarter last year.

IBM's full-year Zacks Consensus Estimates are calling for earnings of $12.37 per share and revenue of $71.26 billion. These results would represent year-over-year changes of +6.73% and +5.52%, respectively.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for IBM. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. Currently, IBM is carrying a Zacks Rank of #3 (Hold).

Investors should also note IBM's current valuation metrics, including its Forward P/E ratio of 19.54. This indicates a discount in contrast to its industry's Forward P/E of 20.43.

It is also worth noting that IBM currently has a PEG ratio of 2.42. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As the market closed yesterday, the Computer - Integrated Systems industry was having an average PEG ratio of 0.76.

The Computer - Integrated Systems industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 22, which puts it in the top 9% of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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