IBM Stock is Down After Earnings Beat

IBM Stock is Down After Earnings Beat

Among 7 analysts who offer a 12-month price forecast for IBM (NYSE: IBM) stock suggests the company has a median target of about $145, with a 12 percent upside. This is the median in the range estimate of $115 to $185. This updated median estimate represents an increase of 9.28 percent from the previous price of $130.86.

In terms of rating, about half of 20 polled investment analysts recommend a HOLD rating. It should be noted that nearly as many analysts would give the stock a BUY rating at this time. And it should also be noted that the rating of HOLD remains unchanged from the last poll taken.

IBM stock price has been mostly in decline for the last nine years. However, while it does fluctuate, the stock is currently on an upswing from its recently low, near $116, in December of last year.

IBM Posts Strong Financial Statement

IBM released its financial statement for Q1 of fiscal year 2022, on April 19. In the statement, IBM reported total revenue of $14.2B, which is 11 percent up year-over-year.

IBM also reported gross profits of $7.3B, which equates to a gross margin of 51 percent. However, pre-tax profits tripled to $623M, year-over-year, which resulted in a pre-tax margin of 4.4 percent. The company reported a pre-tax margin of only 1.8 percent the year before.

The company has a day range of $127.72 to $132.56, which remains up from that recent December bottom. The 52-week range of $114.56 to $144.73 is a little wider, of course.

Consistently Promising Earnings Per Share

For the next earnings report, analysts estimate IBM will post an earnings per share of $2.07 on sales of $13.9B. The next reporting date is October 18. That in mind, Q3 analyst forecast advises a range of $2.21 to $2.61 with a consensus estimate of $2.41.  Reported earnings were spot-on, at $2.41.

Q4 2021 has seen the best performance so far.  Analyst forecast advised an EPS range of $3.00 to $3.94 with a consensus estimate of $3.29 but reported earnings beat the estimate at $3.50.

For Q1 2022, analysts forecast an earnings per share range of $1.29 to $1.61 with a consensus estimate of $1.39. Actual earnings of $1.4 reported. And then the second quarter should continue to the upward trend. For Q2 2022 analysts forecast earnings per share range of $2.07 to $2.38 with a consensus estimate of $2.26. Actual earnings of $2.31

While EPS remained mostly consistent and aligned with analyst consensus, IBM is experiencing negative quarterly growth, of -10.48 percent.

All of this makes sense, though, considering that sales are also down, quarterly, by -10.61 percent. Looking back at the same timeline, actual reported sales tended to beat analyst expectations, but any momentum has still not been enough to reach the same peak it had at one point.

Specifically, the Q3 2021 sales forecast range was $17.6B to 18.0B with a consensus estimate of $17.8B. Reported sales were $17.6B, which means sales barely satisfied the low estimate. However, the Q4 2021 sales forecast range was $15.6B to $16.7B with a consensus estimate of $16.0B and reported sales reached the top of the range, at $16.7B.

The same thing occurred again in the New Year. The Q1 2022 sales forecast range was $12.9B to $14.2B with a consensus estimate of $13.8B; reported sales were again at the top of the range, $14.2B. Then, for Q2 2022 the sales forecast range was $13.9B to 15.4B with a consensus estimate of $15.1B. Reported sales beat the range at $15.5B.

While sales have consistently hit the top of the range for each of the last three quarters, sales are still down, of course, by -10.61 percent. On the other hand, though, reported sales are up, annually, by nearly 5 percent. Again, this suggests that while the stock is still fluctuating, it has been improving over time.

About International Business Machines

While IBM may be among the most recognized acronyms in tech, today, they originally went by three different letters. Founded by Herman Hollerith in the late 19th century, the Computing, Tabulating, and Recording Company (C-R-T) first came into public view as a provider of tabulating equipment for use in the 1890 US census.

This company grew quickly and by the 1920s had transitioned into business and scientific applications. They also changed their name to the International Business Machine Corporation, which gives us the IBM we know today.

By 1964, IBM revolutionized the computer industry by developing the first commercially-available comprehensive family of computers, known as the System/360. This actually caused some competitors to merge in order to avoid bankruptcy, cementing IBM's place in the computing world. While they may not have always had the same kind of definitive success at every turn, IBM remains a stalwart of the industry.

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
International Business Machines (IBM)$132.50+0.1%5.01%67.26Hold$139.20

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