Home Stock Is it too late to sell IBM as shares slump on mixed Q3 results?

Is it too late to sell IBM as shares slump on mixed Q3 results?


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.

Source – TradingView

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.

The post Is it too late to sell IBM as shares slump on mixed Q3 results? appeared first on Invezz.

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