3 Things To Watch When International Business Machines Reports Q1 Earnings by Estimize
International Business Machines (IBM) Information Technology – IT Services | Reports April 18, After Market Closes
International Business Machines Q1 Earnings – Key Takeaways
- The Estimize consensus is calling for EPS of $2.19 on 18.42 billion in revenue, 12 cents higher than Wall Street on the bottom line and $100 million on the top
- IBM’s Strategic Imperatives (analytics, Big Data, cloud computing) grew 26% in 2015, despite decelerating overall growth.
- Soft discretionary IT spending and weak software and legacy services continue to weigh heavily on financial performance
- What are you expecting for IBM? Get your estimate in here!
Earnings season has started once again and the spotlight is aimed at many of the world’s largest companies. Unfortunately, first quarter earnings are unlikely to save us from the impeding earning recession we are currently entrenched in. Amongst the underperformers, IBM is expected to continue its downward trend when they report Q1 earnings this Monday, after the market closes.
The Estimize consensus is calling for EPS of $2.19 on 18.42 billion in revenue, 12 cents higher than Wall Street on the bottom line and $100 million on the top. However, our Select Consensus, a weighted average of the historical most accurate analysts and recent estimates is expecting a more modest beat of 5 cents $50 million. That said, per share estimates have been cut by 28% in the past 3 months and is now predicted to shrink by 22% on a year over year basis. Despite weak earnings, the stock has been surprisingly upbeat, reversing its 8.36% losses of the past 12 months into a 12.02% gain over the last quarter.
Heading into its first quarter earnings, investors will determine whether IBM is effectively transitioning away from its waning legacy business into more high growth markets. Lately, weaker discretionary IT spending, software and legacy services have weighed on its financial performance. What were once the company’s fastest growing sectors have been replaced by cloud computing and analytics. Nonetheless, International Business Machines is investing heavily in cloud computing, Big Data, mobile and security, and of course its cognitive system, Watson. In the short term, IBM must strategically position itself as a major play in cloud computing with Amazon, Microsoft and Google. Recent partnerships with VMware and Box should help IBM streamline business growth. Moreover, unfavorable currency headwinds continue to stabilize, providing a much needed boost to both the top and bottom line.
Do you think IBM can beat estimates? There is still time to get your estimate in here!