IBM (IBM, $146.94) updates earnings impact of $34 billion Red Hat-acquisition
On Friday, International Business Machines (IBM) made an update on the earnings impact of its $34 billion acquisition of open-source software firm Red Hat.
Information tech giant IBM said the acquisition could potentially reduce non-GAAP operating earnings for the full-year 2019 by $1.10 to "at least" $12.80 per share, compared to the $13.90 per share forecast the company published in its second-quarter earnings report on July 16.
However, the company reiterated its 2019 free cash flow estimate of $12 billion. It indicated that the Red Hat deal would lower the company's overall tax rate by 2 percentage points.
Looking ahead, IBM expects Red Hat to add $1.5 billion in free cashflow in 2021. It predicts a "high single-digit" growth rate in overall operating pre-tax income for the 2020-2021 period.
Last month, IBM reported non-GAAP earnings of $3.17 per share which surpassed analysts’ estimates. But the full-year guidance it issued at the time did not include the impact of its Red Hat acquisition.
IBM in upward trend: price rose above 50-day moving average on May 17, 2023
IBM moved above its 50-day moving average on May 17, 2023 date and that indicates a change from a downward trend to an upward trend. In of 39 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on May 17, 2023. You may want to consider a long position or call options on IBM as a result. In of 81 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for IBM just turned positive on May 15, 2023. Looking at past instances where IBM's MACD turned positive, the stock continued to rise in of 47 cases over the following month. The odds of a continued upward trend are .
The 10-day moving average for IBM crossed bullishly above the 50-day moving average on May 25, 2023. This indicates that the trend has shifted higher and could be considered a buy signal. In of 17 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where IBM advanced for three days, in of 328 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The 10-day RSI Indicator for IBM moved out of overbought territory on May 24, 2023. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 similar instances where the indicator moved out of overbought territory. In of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 11 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where IBM declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
IBM broke above its upper Bollinger Band on May 17, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
The Aroon Indicator for IBM entered a downward trend on May 15, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (5.456) is normal, around the industry mean (3.984). P/E Ratio (57.803) is within average values for comparable stocks, (47.072). Projected Growth (PEG Ratio) (2.155) is also within normal values, averaging (1.495). Dividend Yield (0.051) settles around the average of (0.034) among similar stocks. P/S Ratio (1.959) is also within normal values, averaging (2.731).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 83, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. IBM’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a manufacturer of various computer products through the use of advanced information technology
Industry InformationTechnologyServices
IBM and
Correlation & Price change
A.I.dvisor indicates that over the last year, IBM has been loosely correlated with ACN. These tickers have moved in lockstep 52% of the time. This A.I.-generated data suggests there is some statistical probability that if IBM jumps, then ACN could also see price increases.
| Ticker / NAME | Correlation To IBM | 1D Price Change % | ||
|---|---|---|---|---|
| IBM | 100% | +0.96% | ||
| ACN - IBM | 52% Loosely correlated | -0.24% | ||
| CDW - IBM | 49% Loosely correlated | +0.93% | ||
| GIB - IBM | 49% Loosely correlated | +0.41% | ||
| CTSH - IBM | 46% Loosely correlated | -0.48% | ||
| SAIC - IBM | 44% Loosely correlated | +1.63% | ||
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