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IBM Shares Down After Sales Fall for 20th Straight Quarter and Analyst Downgrades

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International Business Machines (NYSE: IBM) can’t seem to catch a break, as its sales declined for the 20th straight quarter. Following its first quarter 2017 financial results, the company got downgraded by some firms. Moving on to its 1Q 2017 financial results.

IBM 1Q 2017 Financial Results

IBM reported revenue of $18.2B, which was a 3% decrease year over year, moreover, even after adjusting for currency fluctuations IBM’s revenue decreased by 2% year over over. The company also missed the consensus estimate of $18.4B. Now, its 1Q 2017 GAAP diluted EPS came in at $1.85, which was an 11% decrease year over year. Additionally, its GAAP net income came in at $1.8B, a decrease of 13% year over year.

On a non-GAAP basis, IBM’s diluted EPS came in at $2.38, which was just a 1% increase year over year. However, its non-GAAP net income was $2.3B for the first quarter of 2017, which was a 1% decrease year over year.

IBM reaffirmed its FY 2017 forecast, and the company still expects its non-GAAP diluted earnings per share to come in at $13.80, or more. Additionally, the company expects its GAAP diluted earnings per share to come in at $11.95 or more.

After the company reported its 1Q 2017 financial results, some analysts lowered their price targets on IBM. Jefferies analyst James Kisner lowered his price target on IBM to $135, from $145. Societe Generale downgraded IBM to Sell, from Hold.

IBM Statistics and Valuation Ratio

The stock traded between $159.60 and $162.45 today. IBM traded between $142.50 and  $182.79, over the past 52 weeks. Consequently, the stock is currently over 10% below its 52-week high and just over 13% above its 52-week low. IBM is currently trading below its

20-, 50- and 200-day simple moving averages. Prior to last night’s earnings results, the 20-day SMA crossed below the 50-day SMA, indicating a bearish pattern. After today’s performance, IBM gave up its gains over the past three months. Moreover, it gave up its YTD gains.

Here’s a look at the stock’s performance on the daily chart:

Source: Investing.com

Heading into the company’s earnings, IBM had a P/E ratio of 13.7, below the industry average of 18.7. IBM has a book value per share (BVPS) of 19.29, and therefore, it closed with a price-to-book ratio of around 8.4, which is above the industry average of 5.6. IBM has a price-to-revenue ratio of 1.93. Additionally, the stock has a price-to-sales ratio (P/S) of approximately 2, which is slightly above the industry average of 1.8.

Final Thoughts

IBM’s sales declined for the 20th straight quarter, and some analysts lowered their price targets on the company. Consequently, shares closed down nearly 5% and dragged the Dow Jones Industrial Average. IBM has had a history of reporting disappointing quarterly results, and it had multiple price target cuts.


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