IBM is gaining attention from investors, according to Zacks.com’s list of most searched stocks. The technology and consulting giant’s strong fundamentals make it an excellent near-term investment, drawing a Zacks Rank #2 (Buy), indicating it may outperform the broader market in the near future and prompting an analysis of key factors that could influence its performance.
The Zacks methodology prioritizes appraising the change in the projection of a company’s future earnings over anything else, based on the group’s belief that the present value of its future stream of earnings is what determines the fair value for its stock. With earnings estimate revisions playing such a critical role, it is well worth noting that IBM’s consensus earnings for the current fiscal year are estimated at $9.46, pointing to an increase of 3.6% from the prior year.
IBM’s projected revenue growth also factors into the Zacks recommendation, with the consensus sales estimate for the current quarter of $14.29 billion indicating a year-over-year increase of 0.6%, and estimates for the current and next fiscal years stand at $62.09 billion and $64.58 billion, indicating 2.6% and 4% increases, respectively. Over the last four quarters, IBM has surpassed consensus EPS estimates three times, topping consensus revenue estimates each time over this period. This indicates the company’s strong ability to deliver results and drive further growth over the near term.
The Zacks Style Scores System includes the Zacks Value Style Score, which evaluates both traditional and unconventional valuation metrics, organizes stocks into five groups ranging from A to F (with A at the top rank), helping to identify whether or not a stock is overvalued, rightly valued, or temporarily undervalued. This system has graded IBM at a C, indicating that it is trading on par with its peers.
Overall, the Zacks Rank no. 2 certainly suggests that IBM may outperform the broader market in the near term, and the Zacks analysis of the company may help determine whether or not it’s worth paying attention to the recent market buzz about the tech giant.