International Business Machines Earnings Preview

Motley Fool Staff
Updated

Investors are on the edge of their seats, hoping that International Business Machines (NYS: IBM) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Monday, Oct. 17. IBM creates integrated solutions that leverage information technology and a deep knowledge of business processes for clients.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back International Business Machines as a buy. But with 60% of analysts rating it a buy, International Business Machines is still below the mean analyst rating of its nearest 10 competitors, which average 62.7% buys. Analysts don't like International Business Machines as much as competitor Microsoft overall. Sixteen out of 24 analysts rate Microsoft a buy compared to 12 of 20 for International Business Machines. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.

  • Revenue Forecasts: On average, analysts predict $26.27 billion in revenue this quarter. That would represent a rise of 8.2% from the year-ago quarter.

  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $3.22 per share. Estimates range from $3.15 to $3.31.

What our community says:
CAPS All-Stars are solidly behind the stock, with 94.2% giving it an "outperform" rating. The community at large agrees with the All-Stars, with 90.2% granting it a rating of "outperform." Fools are bullish on International Business Machines and haven't been shy with their opinions lately, logging 1,160 posts in the past 30 days. Even with a robust four out of five stars, International Business Machines' CAPS rating falls a little short of the community's upbeat outlook.

Management:
International Business Machines' profit has risen year over year by an average of 9.8% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

46.4%

44.1%

49.0%

45.3%

Operating Margin

19.1%

15.1%

23.1%

18.1%

Net Margin

13.7%

11.6%

18.1%

14.8%

One final thing: If you want to keep tabs on International Business Machines movements, and for more analysis on the company, make sure you add it to your Watchlist.

At the time thisarticle was published The Motley Fool owns shares of International Business Machines.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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