International Business Machines (IBM, Financial) is reporting some good news, on a day when the same cannot be said about fellow Dow components Citi (C, Financial) with persistent nationalization rumors and General Motors (GM, Financial) losing nearly $10 billion more in the last quarter. The contrast between IBM and the others is stark, as IBM reaffirmed today that earnings per share guidance will remain at $9.20.
It just seems that IBM is making all of the right moves in these difficult times. Clearly, the Wall Street analysts were not anticipating news this good as the average estimate is $9.05, and some were as low as $8.17 per share. The services portion of the business is driving IBM’s strength right now, which could bode will for Hewlett-Packard’s (HPQ, Financial) recent acquisition of EDS. As opposed to sales of PC’s, revenue from service contracts are a steady stream, so investors get especially excited about this sort of growth. As mentioned above, the stock is getting a nice pop from this news and is trading around $90 per share. Even with IBM making all of the right moves, there stock is still only getting less than 10x expected earnings. So, while we are not saying they are the most Undervalued in our universe of coverage, they seem to be a leader of the pack in terms of performance.
It just seems that IBM is making all of the right moves in these difficult times. Clearly, the Wall Street analysts were not anticipating news this good as the average estimate is $9.05, and some were as low as $8.17 per share. The services portion of the business is driving IBM’s strength right now, which could bode will for Hewlett-Packard’s (HPQ, Financial) recent acquisition of EDS. As opposed to sales of PC’s, revenue from service contracts are a steady stream, so investors get especially excited about this sort of growth. As mentioned above, the stock is getting a nice pop from this news and is trading around $90 per share. Even with IBM making all of the right moves, there stock is still only getting less than 10x expected earnings. So, while we are not saying they are the most Undervalued in our universe of coverage, they seem to be a leader of the pack in terms of performance.
