IBM stock: a good buy or a value trap?

11:48 pm ET, 14 Oct 2018

International Business Machines Corporation (IBM) shares are trading at $141.50, up 2%. The company is announcing its quarterly earnings results on Tuesday after the market close. What's driving IBM's stock price? What's IBM's stock price forecast?

IBM is a leading technology company. It currently operates in five business segments: Cognitive Solutions, Global Business Services, Technology Services & Cloud Platforms, Systems, and Global Financing. The Company’s dividend currently yields about 4.3%. 

Investors are showing interest in the stock because of IBM's low valuation. On the other hand, some investors are losing patience with IBM since the company is failing to grow its top line. The last quarter’s revenue rose 3.7% to $20.0 billion and earnings per share came at $3.08 compared to $2.97 for the same period last year.

The next quarter’s results will be released after market close on October 16, 2018. Analysts expect the company to earn $3.39 per share on revenue of $19.12 billion. The company beat analyst estimates in the previous four quarters.

What is the sentiment towards the IBM stock? Our technical analysis shows that: 

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending positive;
  • The long-term sentiment (9-12 months) is trending negative. 

Over the last month, International Business Machines Corporation (IBM) returned +1.62%.

International Business Machines Corporation (IBM) average analyst price target ($162.77) is 9.22% above its current price ($149.03).

For the latest price and information on International Business Machines Corporation, please visit Finstead and search for "IBM price" or "IBM news".

Box (BOX) stock: not-so-profitable growth

5:50 am ET, 28 Aug 2018

Box, Inc. (BOX) shares are trading at $26.05, prior to the earnings today. What should investors be aware of--and what will the market be watching out for in the upcoming earnings?

Box continues to ride on increasing adoption of its cloud content management platform by its existing customers as well as new customers. The company is witnessing a solid growth in its paid customer base which is aiding its top-line growth.

The company’s efforts toward enriching its cloud management and AI platforms will drive growth in fiscal 2019.  Its platform today integrates with some of the biggest enterprise technology providers such as Microsoft, Apple, IBM, Google, and Salesforce. The company enables in-house enterprise developers and independent software developers to create applications with ease. As a result, the company has a strong user base that includes more than 60 million registered users. 

What worries investors about Box is its profitability.  Box has been incurring losses since it went public in 2005; the company had an accumulated a deficit of $1.04 billion. Box’s current focus is on scaling its business through making significant investments in its cloud infrastructure, development, professional services, sales, marketing and so on. The company said that it will continue making such investments and as result does not expect profit in the foreseeable future.

What is the sentiment towards the Box stock? Our technical analysis shows that: 

  • The stock short-term sentiment (next 30 days) is trending negative;
  • The mid-term sentiment (3-6 months) is trending negative;
  • The long-term sentiment (9-12 months) is trending negative. 

Box, Inc. (BOX) forward P/E ratio is 428.5, and it’s high compared to its industry peers’ P/E ratios.

Box, Inc. (BOX) short share of float is 7.7%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

Box, Inc. (BOX) average analyst price target ($26.00) is -0.46% below its current price ($26.12).

For the latest price and information on Box, Inc., please visit Finstead and search for "BOX price" or "BOX news".

IBM earnings preview: pay attention to firm's Strategic Imperatives

12:54 pm ET, 16 Jul 2018

International Business Machines Corporation (IBM) is expected to report earnings on July 18 after market close.  The report will be for the fiscal quarter ending June 2018. Shares are trading at 144.94, up 0.16%.

What are IBM earnings expectations?  What news will the market be watching out for?  

IBM’s first-quarter results were mostly in line with analysts' expectations, although revenue was slightly impacted by some execution issues in the storage hardware business given the fiercely competitive nature of the industry. IBM’s storage hardware revenue slid 15% year over year. Meanwhile, IBM announced further repositioning efforts of its portfolio, primarily in SG&A. 

IBM’s ongoing portfolio readjustment toward higher-value enterprise IT is now necessary for the firm to avoid competitive relegation and commoditization. To that end, the firm’s higher-value Strategic Imperatives business accounted for 47% of its revenue over the past 12 months (up from 46% in the prior quarter), and for the quarter grew 10% over the prior year in constant currency. While the Strategic Imperative business continues to grow and will eventually become the majority of revenue, the growth trajectory will gradually slow down.

International Business Machines Corporation has a history of beating analysts’ earnings estimates. In the past four quarters, the company: 

  • Beat analyst EPS estimates by 24 cents ($2.97 actuals vs. $2.73 forecast) in FQ2’17;
  • Beat analyst EPS estimates by 2 cents ($3.30 actuals vs. $3.28 forecast) in FQ3’17;
  • Beat analyst EPS estimates by 1 cent ($5.18 actuals vs. $5.17 forecast) in FQ4’17;
  • Beat analyst EPS estimates by 5 cents ($2.45 actuals vs. $2.40 forecast) in FQ1’18.

For FQ2’18, EPS is expected to grow by 2% year-over-year to $3.03, while revenue is expected to grow 2% year-over-year to $19.66 billion.  

Over the last month, International Business Machines Corporation (IBM) returned -1.12%.

International Business Machines Corporation (IBM) forward P/E ratio is 9.89, and it’s low compared to its industry peers’ P/E ratios.

International Business Machines Corporation (IBM) average analyst price target ($168.69) is 16.39% above its current price ($144.94).

For the latest price and information on International Business Machines Corporation, please visit Finstead and search for "IBM price" or "IBM news".

IBM is in the middle of yet another digital revolution, and while the jury is still out on the long-term strategic and financial success of initiatives like analytics and cloud computing, rising sales from these products will mostly offset slow declines in legacy businesses. IBM’s large, profitable, and sticky core operations will protect it from any precipitous slide in competitive positioning. 

IBM’s pervasiveness across the enterprise IT landscape is undeniable, as the company has been at the forefront of providing high-quality IT hardware, software, and services on a global scale for decades. Still, enterprise adoption of cloud computing, commoditization of hardware, and exposure to legacy IT services mean that IBM needs to pivot. The firm’s core operations are stagnant, and the company is doubling down on higher-growth “Strategic Imperatives,” to counteract the growth shortfall.

Red Hat (RHT) earnings preview: what to expect?

7:33 am ET, 21 Jun 2018

On Thursday, June 21, after the closing bell Red Hat, Inc. (RHT) is announcing its Q1'19 earnings.  Red Hat shares are now trading at $172, up 0.82%.  What can you expect from RHT earnings?  What will be the biggest RHT stock news?  

For the first quarter, the company is expected to make $807 million in revenue, a 19% increase over last year's first quarter.   The consensus Earnings Per Share (EPS) is $0.68, representing a 23% year-over-year increase.

RedHat has a strong history of growth.    Both revenue and EPS have grown double-digit in the past 8 quarters.  

The company has also massively exceeded Wall Street analyst expectations.  In the most recent quarter, the company beat the Wall Street consensus EPS by 11 cents, 14% above what the analysts had predicted.

Red Hat's growth is predicated on its strong partner base, which includes companies such as Google Cloud Platform, Microsoft Azure and Amazon Web Services, IBM and Dell.  Those partnerships are helping Red Hat sell its cloud-based technologies and products; management expects the partner base to drive 80% of new bookings in the near term.

Over the last couple of years, Red Hat acquired a number of startups: CoreOS, Permabit, Codenvy, 3scale, Ansible, FeedHenry, eNovance, Inktank, and Codenvy. The company’s acquisitions that are now integrated with its mainstream business have expanded its product portfolio into new segments, such as hybrid cloud computing, cloud management, OpenShift, OpenStack, and storage.

What drives Red Hat's growth, in particular, is OpenShift.  The market for OpenShift is expanding rapidly.  Another driving force for the quarter is Red Hat’s containerized application offering.

Over the last month, Red Hat, Inc. (RHT) returned +4.51%.

Red Hat, Inc. (RHT) forward P/E ratio is 43.65, and it’s high compared to its industry peers’ P/E ratios.

Red Hat, Inc. (RHT) average analyst price target ($168.45) is -1.28% below yesterday's close-of-business price ($170.64).  The RHT stock forecast does seem particularly bullish at this point. 

For the latest price and information on Red Hat, Inc., please visit Finstead and search for "RHT price" or "RHT news".

IBM: recovery underway?

11:09 am ET, 18 Apr 2018

IBM first-quarter results were mostly in line with our expectations; however, revenue was negatively impacted by the storage hardware business (it's a very competitive segment of the hardware market).   For the latest news, visit Finstead's IBM page

IBM’s storage hardware revenue declined 15% since last year. 

Meanwhile, IBM is making adjustments in its portfolio so it focuses on the higher-value segment of the enterprise market.  This is much needed so that the company avoids competing against vendors addressing the commodity hardware segment.  

IBM's so-called "strategic" business accounted for 47% of its revenue over the past 12 months, and it grew at a solid pace (10%) in Q1. 

The "strategic" business will become the majority of revenue over time.   This is the right direction for the company in the long run.  However, we expect the "strategic" business revenue growth to decline in the mid-term.

Over the last year, IBM returned -11.89%. This return is lower than Information Technology Services sector (26.83%), Technology industry (23.22%), and S&P 500 (15.55%) returns.

Oracle (ORCL): What Is The Stock Forecast?

1:42 pm ET, 19 Mar 2018

Oracle strikes our attention as a stock that’s poised to beat the analyst estimate this earnings season.  The company is releasing its earnings this week, and investors are excited about the prospect of cloud growth at Oracle.  

Based on Finstead research, ORCL price target upside is 6.28%.

The reason why we’re seeing an excitement in the investment community is, Oracle is indicating favorable earnings as of lately, which is generally a precursor to an earnings beat. The analysts are raising estimates right before earnings, which is a pretty good indicator of some favorable trends going on for Oracle.

So the question is, how high can the stock go?  Based on Finstead, the average price target is $55.55. 

The optimists are saying that the price should be in the $60s.  


And Oracle valuation ratios seem pretty low.  Only IBM and HPE are valued below Oracle, based on forward P/E ratio. 

What are your thoughts on upcoming Oracle earnings?

IBM's Earnings: What You Need To Know

6:19 pm ET, 17 Jan 2018

IBM (NYSE: IBM) is set to report its earnings on Thursday, after the closing bell.  

Here are a few things you should know about IBM pre-earnings.

IBM’s growth thus far has been driven by analytics and big data, cloud computing, mobile, and security. In the third quarter, revenues from strategic Imperatives grew 10% year-over-year and now form over 45% of IBM’s top line. Cloud revenues grew 20%, while security surged 49%.  

Cloud revenues are now over $15 billion (based on the trailing 12 months), approximately one-fifth of the Company's top line. 

IBM has registered strong business results in growth markets. What helped IBM gain traction in emerging markets is its software and cloud offerings.  The emerging markets will play a key role for IBM, as growth in the developed markets slows down.

IBM’s portfolio of strategic acquisitions is impressive: over 150 companies were acquired since 2000. Those accretive acquisitions have been integrated into IBM’s mainstream business, and have spurred growth in areas such as cloud computing and big data. 

Based on Finstead research, analysts are calling for a price target somewhat below the current price (the upside is -2.89%; visit Finbot and type “IBM upside”).  

It’s important to note that the market had a pretty notable reaction to IBM’s earnings in the last eight quarters. In the most recent quarter, the stock jumped over 8% above the pre-earnings price.  

Over the last year, IBM returned +0.67%. This return is lower than Information Technology Services Industry (27.53%), Technology Sector (27.81%), and S&P 500 (23.58%) returns.

International Business Machines Corporation (IBM) Stock Guide

Updated at: 4:28 am ET, 17 Sep 2020

Before we start: if you're looking for IBM stock price, you can quickly find it out by visiting Finny and typing "IBM quote". If you're looking for a quick scoop on IBM stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "IBM". You'll get all this info in one place. Or you can just type "IBM news" to get the latest stock news.

Looking to buy or sell International Business Machines Corporation (IBM)? Interested in getting the full scoop on IBM, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this IBM stock guide, we'll address key questions about IBM, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are IBM earnings?
2. What is IBM dividend?
3. What is IBM dividend yield?
4. What is IBM stock forecast (i.e., prediction)?
5. IBM buy or sell? What is IBM Finny Score?
6. What are the reasons to buy IBM? Why should I buy IBM stock?
7. What are the reasons to sell IBM? Why should I sell IBM stock?
8. What are IBM key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are IBM earnings?

IBM trailing 12-month earnings per share (EPS) is $8.81.

2. What is IBM dividend?

IBM forward dividend is $6.52.

3. What is IBM dividend yield?

IBM forward dividend yield is 5.29%.

Analyst Predictions

4. What is IBM stock forecast (i.e., prediction)?

Based on IBM analyst price targets, IBM stock forecast is $135.19 (for a year from now). That means the average analyst price target for IBM stock is $135.19. The prediction is based on 25 analyst estimates.

The low price target for IBM is $115.00, while the high price target is $155.00.

IBM analyst rating is Hold.

Analysis

5. IBM buy or sell? What is IBM Finny Score?

#{finnyScore:40}Our quantitative analysis shows 2 reasons to buy and 3 reasons to sell IBM, resulting in Finny Score of 40.

6. What are the reasons to buy IBM? Why should I buy IBM stock?

Here are the reasons to buy IBM stock:

  • IBM is seeking to create an extensive developer ecosystem that will build on top of frameworks like Watson. Although early, we think this is a positive step forward for its enterprise application and Big Data and analytics businesses.
  • Enterprise IT complexity and demand for digital transformation skills will continue to drive core and strategic initiative work.
  • IBM's $119 billion-plus services backlog and existing relationships provide great insight into customer requirements, which benefits new product development and research initiatives.
  • IBM forward dividend yield is 5.29%, higher than the industry (0.43%) and sector (0.26%) forward dividend yields. See IBM forward dividend chart.
  • IBM cash to debt ratio is 0.20, higher than the average industry (0.14) and sector (0.17) cash to debt ratio. See IBM cash to debt chart.

7. What are the reasons to sell IBM? Why should I sell IBM stock?

Let's look at the reasons to sell IBM stock (i.e., the bear case):

  • IBM’s public cloud IaaS offering, SoftLayer, has a very small share of the market which may limit its appeal to business partners and customers. According to Gartner, more than 90% of all public cloud IaaS compute capacity in use is in Amazon.
  • Owing to the firm’s size, IBM’s product portfolio has been criticized for being too complicated with a lack of integration across product strategies. Clients can be overwhelmed by choice and complexity.
  • IBM’s network security portfolio is incomplete, and the Power Systems server and storage businesses face fierce competition and pricing pressure.
  • IBM quarterly revenue growth was -5.40%, lower than the industry and sector average revenue growth (1.76% and 0.89%, respectively). See IBM revenue growth chart.
  • IBM profitability is declining. The YoY profit margin change was -7.59 percentage points. See IBM profitability chart.
  • IBM short interest (days to cover the shorts) ratio is 4.51. The stock garners more short interest than the average industry, sector or S&P 500 stock. See IBM short interest ratio chart.

Key Stats

8. What are IBM key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for IBM:

Metrics IBM
Price $119.85
Average Price Target / Upside $135.19 / 12.80%
Average Analyst Rating Hold
Forward Dividend Yield 5.29%
Industry Information Technology Services
Sector Technology
Number of Employees 381,100
Market Cap $109.9B
Forward P/E Ratio 10.10
Price/Book Ratio 1.46
Revenue (TTM) $75.5B
YoY Quarterly Revenue Growth -5.40%
Profit Margin 10.43%

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