IBM Gears Up to Report Q4 Earnings: What’s in the Cards? – Yahoo Finance

International Business Machines IBM is set to report fourth-quarter 2019 results on Jan 21.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $4.69, unchanged for the past seven days. The estimate indicates a fall of about 3.7% from the year-ago quarters reported figure. For quarterly sales, the consensus mark stands at $21.7 billion that suggests a year-over-year decline of 0.3%.

Notably, the company has four-quarter positive earnings surprise of 2%, on average. In the last reported quarter, IBM delivered positive earnings surprise of 1.5%.

In the last reported quarter, the company delivered non-GAAP earnings of $2.68 per share, which surpassed the Zacks Consensus Estimate by 1.5%. However, the bottom line fell 22% from the year-ago quarters tally.

Revenues of $18.03 billion missed the Zacks Consensus Estimate by 1.2% and declined 3.9% on a year-over-year basis. At constant currency (cc), the metric dropped 0.6%.

International Business Machines Corporation Price, Consensus and EPS Surprise

International Business Machines Corporation Price, Consensus and EPS Surprise

International Business Machines Corporation price-consensus-eps-surprise-chart | International Business Machines Corporation Quote

Things to Watch Out

IBM is likely to have benefited from robust adoption of its cloud computing, mobile, security, analytics, cognitive technologies and AI related solutions in the to-be-reported quarter.

Markedly, deal wins and acquisitions are expected to have played an important role in boosting the companys portfolio and expand clientele in the cloud market. The buyout of Red Hat is likely to have paved way for growth in the hybrid cloud business. In fact, Red Hats expanding foothold across Asia Pacific is anticipated to have bolstered IBMs revenues in the cloud segment.

Further, IBM is striving to enhance efficiency of its quantum computing systems and services. In this respect, growing clientele of IBM Q Network is a positive. With quantum computing initiatives, the company attempts to help enterprises accelerate difficult financial and technical problems in real time.

Additionally, IBMs growth in industry verticals like health, key areas of analytics and security is likely to have boosted fourth-quarter performance. Notably, Watson Health has been witnessing broad-based growth in Payer, Provider, Imaging and Life Sciences domains.

However, we note that pricing pressures related to the companys legacy hardware business and ballooning debt levels have been headwinds.

Moreover, the company has been facing declines in its IBM Z product cycle and storage business.

These downsides along with adverse impacts from currency rates might have exerted pressure on the to-be-reported quarter's results.

What Our Model Says

Our proven model doesnt conclusively predict an earnings beat for IBM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But thats not the case here. You can uncover the best stocks to buy or sell before theyre reported with our Earnings ESP Filter.

IBM has a Zacks Rank #3 and an Earnings ESP of -0.11.

Stocks to Consider

Here are some stocks you may consider as our proven model shows that these have the right mix of elements to beat estimates this time:

Apple AAPL has an Earnings ESP of +4.08% and a Zacks Rank of 2. You can see the complete list of todays Zacks #1 Rank stocks here.

Adobe Systems ADBE has an Earnings ESP of +1.08% and a Zacks Rank of 2.

Broadcom AVGO has an Earnings ESP of +5.37% and a Zacks Rank of 3.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q3 2019, while the S&P 500 gained +39.6%, five of our strategies returned +51.8%, +57.5%, +96.9%, +119.0%, and even +158.9%.

This outperformance has not just been a recent phenomenon. From 2000 Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.

See their latest picks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportInternational Business Machines Corporation (IBM) : Free Stock Analysis ReportApple Inc. (AAPL) : Free Stock Analysis ReportAdobe Systems Incorporated (ADBE) : Free Stock Analysis ReportBroadcom Inc. (AVGO) : Free Stock Analysis ReportTo read this article on Zacks.com click here.

Follow this link:
IBM Gears Up to Report Q4 Earnings: What's in the Cards? - Yahoo Finance