IBM Earnings Arrive After the Bell

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S&P 500 (NYSE:SPY) component IBM (NYSE:IBM) will unveil its latest earnings on Tuesday, October 16, 2012. IBM creates integrated solutions that leverage information technology and a deep knowledge of business processes for clients.

IBM Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for profit of $3.61 per share, a rise of 10.1% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $3.62. Between one and three months ago, the average estimate moved down. It has been unchanged at $3.61 during the last month. Analysts are projecting profit to rise by 13.1% versus last year to $15.13.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 9 cents, reporting net income of $3.51 per share against a mean estimate of profit of $3.42 per share.

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Stock Price Performance: Between July 17, 2012 and October 10, 2012, the stock price rose $22.17 (12.1%), from $183.65 to $205.82. The stock price saw one of its best stretches over the last year between September 4, 2012 and September 17, 2012, when shares rose for 10 straight days, increasing 6.5% (+$12.61) over that span. It saw one of its worst periods between September 17, 2012 and September 26, 2012 when shares fell for eight straight days, dropping 1.5% (-$3.15) over that span.

A Look Back: In the second quarter, profit rose 5.9% to $3.88 billion ($3.34 a share) from $3.66 billion ($3 a share) the year earlier, exceeding analyst expectations. Revenue fell 3.3% to $25.78 billion from $26.67 billion.

Wall St. Revenue Expectations: Analysts predict a decline of 3% in revenue from the year-earlier quarter to $25.38 billion.

Key Stats:

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 4.4% in the fourth quarter of the last fiscal year and 7.1% in the first quarter before increasing again in the second quarter.

On the top line, the company is looking to get back on the right track after last quarter’s drop snapped a string of revenue increases. Revenue rose 7.8% in the third quarter of the last fiscal year, 1.6% in the fourth quarter of the last fiscal year and 0.3%in the first quarter before dropping in the second quarter.

Analyst Ratings: There are mostly holds on the stock with 13 of 24 analysts surveyed giving that rating.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.22 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term. The company regressed in this liquidity measure from 1.28 in the first quarter to the last quarter driven in part by a decrease in current assets. Current assets decreased 3% to $47.39 billion while liabilities rose by 1.8% to $38.9 billion.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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