IBM’s earnings report for Q2 2018 will be made public after the closing bell on Wall Street on Wednesday. The consensus recommendation for the company is “hold”, which negatively compares to the “buy” average consensus recommendation for the IT Services & Consulting peer group.
The multinational tech company is anticipated to have made $3.04 in earnings per share (EPS) during the quarter ending in June, according to analysts submitting their projections to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S). Earnings projections have fallen from $3.05 per share over the last four weeks. Still, if the corporation’s bottom line matches estimates, this would represent an increase of 2.4% compared to the respective quarter from last year when the firm earned $2.97 per share. Additionally, analysts’ EPS forecasts range from $2.96 to $3.11. For the record, IBM managed to surpass Wall Street’s estimates in all four previously reported quarters.
Apart from earnings, investors will be scrutinizing other aspects of the firm’s release, more specifically margins & revenue growth. Specifically, the stock price crashed (see following chart) in the aftermath of Q1’s corresponding release despite delivering an earnings beat. The fall back then was attributed to narrowing profit margins and lack of underlying revenue growth that cast a shadow over the future of the computer-services provider; some growth in sales was recorded, though that was attributed to currency fluctuations. Meanwhile, management guidance is also of importance and can spur positioning in the company’s shares.
Upbeat results by the corporation are likely to generate buying interest for its stock. A break above Friday’s one-month high of $146.98 could meet resistance around the current level of the 100-day moving average at $148.26. The area around the latter also encapsulates the 38.2% Fibonacci retracement level of the January 18 to June 27 downleg at $150.32. In the event of stronger gains, the 50% Fibonacci mark of $154.30 would be eyed next; the region around this was somewhat congested during February and March. However, selling pressure could emerge in case of disappointing numbers. Given a fall below the 23.6% Fibonacci level at $145.41 – the price has closed only marginally above this on Monday –, support may take place around the 50-day moving average at $143.39, with a drop below increasingly bringing into scope the near two-and-a-half-year low of $137.45 from late June.
Gauging the short-term bias with the RSI, the indicator has halted its advance after the shares touched a one-month high last week, signaling that the bullish momentum has partly eased. Nevertheless, Wednesday’s results and guidance have the potential to shift the bias in either direction.
Strategic areas where the company has invested and will thus determine the outlook are cloud computing, blockchain technologies, software relating to information security, data analytics and artificial intelligence.
IBM is an S&P 500 constituent stock, as well as being one of the thirty blue chips that make up the Dow Jones Industrial Average. Year-to-date, the New-York based firm is trading lower by 5.2%, underperforming the two benchmarks which are up by 4.7% and 1.4% correspondingly so far in 2018.
In terms of valuation, IBM’s forward P/E ratio (price over forecasted earnings over the next twelve months) stands at 10.40, below the respective number of its peers. This may indicate an underpriced stock, or one that is lacking growth prospects, at least from investors’ point of view. The chart below perhaps reflects failed attempts over the last few years to revive the company as one of the “hottest” within the tech industry. Particularly, the reinvested total return from an investment in the corporation five years ago would have yielded a negative return of 11.8%, which poorly compares to the positive 84.5% by the S&P 500.
The current and upcoming weeks are very busy in terms of corporate earnings releases. Some other big names releasing quarterly results on Wednesday are American Express, Alcoa, eBay (all three after the market close) and Morgan Stanley (before the market open).
IBM’s earnings report for Q2 2018 will be made public after the closing bell on Wall Street on Wednesday. The consensus recommendation for the company is “hold”, which negatively compares to the “buy” average consensus recommendation for the IT Services & Consulting peer group.
The multinational tech company is anticipated to have made $3.04 in earnings per share (EPS) during the quarter ending in June, according to analysts submitting their projections to Thomson Reuters’ estimate system (the Institutional Brokers’ Estimate System – I/B/E/S). Earnings projections have fallen from $3.05 per share over the last four weeks. Still, if the corporation’s bottom line matches estimates, this would represent an increase of 2.4% compared to the respective quarter from last year when the firm earned $2.97 per share. Additionally, analysts’ EPS forecasts range from $2.96 to $3.11. For the record, IBM managed to surpass Wall Street’s estimates in all four previously reported quarters.
Apart from earnings, investors will be scrutinizing other aspects of the firm’s release, more specifically margins & revenue growth. Specifically, the stock price crashed (see following chart) in the aftermath of Q1’s corresponding release despite delivering an earnings beat. The fall back then was attributed to narrowing profit margins and lack of underlying revenue growth that cast a shadow over the future of the computer-services provider; some growth in sales was recorded, though that was attributed to currency fluctuations. Meanwhile, management guidance is also of importance and can spur positioning in the company’s shares.
Upbeat results by the corporation are likely to generate buying interest for its stock. A break above Friday’s one-month high of $146.98 could meet resistance around the current level of the 100-day moving average at $148.26. The area around the latter also encapsulates the 38.2% Fibonacci retracement level of the January 18 to June 27 downleg at $150.32. In the event of stronger gains, the 50% Fibonacci mark of $154.30 would be eyed next; the region around this was somewhat congested during February and March. However, selling pressure could emerge in case of disappointing numbers. Given a fall below the 23.6% Fibonacci level at $145.41 – the price has closed only marginally above this on Monday –, support may take place around the 50-day moving average at $143.39, with a drop below increasingly bringing into scope the near two-and-a-half-year low of $137.45 from late June.
Gauging the short-term bias with the RSI, the indicator has halted its advance after the shares touched a one-month high last week, signaling that the bullish momentum has partly eased. Nevertheless, Wednesday’s results and guidance have the potential to shift the bias in either direction.
Strategic areas where the company has invested and will thus determine the outlook are cloud computing, blockchain technologies, software relating to information security, data analytics and artificial intelligence.
IBM is an S&P 500 constituent stock, as well as being one of the thirty blue chips that make up the Dow Jones Industrial Average. Year-to-date, the New-York based firm is trading lower by 5.2%, underperforming the two benchmarks which are up by 4.7% and 1.4% correspondingly so far in 2018.
In terms of valuation, IBM’s forward P/E ratio (price over forecasted earnings over the next twelve months) stands at 10.40, below the respective number of its peers. This may indicate an underpriced stock, or one that is lacking growth prospects, at least from investors’ point of view. The chart below perhaps reflects failed attempts over the last few years to revive the company as one of the “hottest” within the tech industry. Particularly, the reinvested total return from an investment in the corporation five years ago would have yielded a negative return of 11.8%, which poorly compares to the positive 84.5% by the S&P 500.
The current and upcoming weeks are very busy in terms of corporate earnings releases. Some other big names releasing quarterly results on Wednesday are American Express, Alcoa, eBay (all three after the market close) and Morgan Stanley (before the market open).
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