IBM Q4 Earnings Preview: Assessing Growth Prospects in Light of Recent Industry Trends
AInvestWednesday, Jan 24, 2024 3:46 pm ET
1min read
IBM --

As we approach the release of IBM's Q4 results, there's a growing focus on the company's potential for growth and the value of its shares after a big beat and breakout from peer SAP. Set to announce its earnings today after market close, with a conference call at 5 PM ET, IBM is anticipated to report a 5% year-over-year increase in earnings per share (EPS) to $3.79 and a 4% rise in revenue to $17.29 billion.

IBM's guidance for the full year 2023, including a Free Cash Flow (FCF) projection of $10.5 billion and a constant currency (CC) revenue growth range of 3-5%, will be closely watched. The company's streamlined structure, post-Kyndryl spin-off, comprises three key segments: Software, Consulting, and Infrastructure, each playing a crucial role in IBM's overall performance.

Q3's results showcased IBM's strengths, particularly in the Software and Consulting segments, driven by digital transformation and application modernization trends. However, the Infrastructure segment has lagged, indicating a potential area of focus for investors. IBM's total CC revenue growth for Q4 is expected to mirror Q3's performance, despite facing tougher comparisons from last year's significant contributions in Software and Infrastructure.

IBM's track record over the past five years reveals consistent EPS achievements, though revenue results have been more variable. The company's stock has been performing well, recently exceeding the $170 mark for the first time in several years. Additionally, SAP's strong performance could have positive implications for IBM, suggesting a favorable environment for enterprise IT solutions.

International Business Machines Corporation, with its extensive global presence and comprehensive range of IT services and solutions, remains a key player in the technology sector. IBM's positioning, with a lower forward P/E ratio compared to the S&P 500 and its peers in the Technology sector, highlights its potential as a value investment.

As we anticipate IBM's Q4 earnings, the focus will be on the company's ability to maintain growth in its key segments and adapt to the evolving IT landscape. The outcomes of this earnings report will be crucial for investors to evaluate IBM's future trajectory and investment potential in the context of the broader technology sector.

$IBM(IBM)

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