Is it too late to sell IBM as shares slump on mixed Q3 results?
- IBM shares on Thursday plunged nearly 8% after announcing its most recent quarterly results.
- The company reported its fiscal Q3 results matching analyst expectations on earnings.
- However, revenue for the quarter fell short of estimates after registering a marginal Y/Y growth of 0.3%
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On Thursday, IBM Corp (NYSE:IBM) shares plummeted nearly 8% after announcing its most recent quarterly results. The company reported its fiscal third-quarter results Wednesday after markets closed, matching earnings expectations. However, its revenue for the period came short of the consensus Street estimate.
IBM posted FQ3 non-GAAP earnings per share of $2.52, in line with expectations, while its GAAP EPS of $1.25 came short of the consensus Street estimate of $1.90. On the other hand, revenue for the quarter grew marginally by 0.3% from the same quarter a year ago to $17.62 billion, $190 million below the average for analyst expectations.
The company attributed the revenue miss to a disappointing performance from the global technology services unit, whose sales declined by 5% from a year ago to $6.15 billion. IBM plans to spin-off the init next month.
Is it time to buy IBM shares?
From an investment perspective, IBM shares trade at a reasonable P/E ratio of 24.83 and a compelling forward P/E ratio of 10.53, making it an attractive option for value investors.
Moreover, with analysts expecting its earnings per share to grow at an average annual rate of 16.57% over the next five years as compared to a decline of 14.4% in the previous five, the stock could also gain the attention of growth investors.
In addition, IBM’s exciting forward dividend yield of about 5% could attract dividend investors.
Technically, IBM shares seem to have recently plummeted to break out of a sideways channel formation. As a result, the stock price has moved closer to the oversold conditions of the 14-day RSI, creating an opportunity for a rebound.
Therefore, investors could target potential rebound profits at about $136.51, or higher at $140.50, while $128.08 and $123.64 are crucial support zones.
Buy the pullback?
In summary, with IBM shares plunging nearly 8% on Thursday, the stock has moved closer to oversold conditions, thus creating an opportunity for a rebound. Moreover, the company offers exciting growth at compelling valuation multiples whilst paying dividends at an attractive yield.
Therefore, it could be time to buy the stock following Thursday’s sharp decline.
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