International Business Machines Corp ( IBM ) is set to
announce its first quarter 2013 results on Apr 18. In the last
reported quarter, IBM surpassed the Zacks Consensus Estimate by
2.67%. Let's see how things are shaping up for this
Factors this Past Quarter
IBM's top line beat the Zacks Consensus Estimate in the fourth
quarter after lagging for five consecutive quarters. The software
segment continued its growth on a year-over-year basis while the
Services and Hardware/System & Technology segment
Despite sluggish revenues from Hardware/System & Technology,
IBM gained significant market share during the quarter, primarily
driven by 350 new contracts from customers previously associated
with Hewlett-Packard and Oracle ( ORCL ).
Moreover, margin expansion and lower-than-expected operating
expenses positively impacted earnings per share in the quarter.
IBM forecasts fiscal 2013 operating earnings of at least $16.70
per share, an estimated 9.5% increase from $15.25 reported in 2012.
IBM continues to expect the effective tax-rate to be around 25% for
Our proven model does not conclusively show that IBM is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive Zacks Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) and a
Zacks Rank of #1, 2 or 3 for this to happen. That is not the case
here as you will see below.
Zacks ESP: The Most Accurate estimate
stands at $3.05 while the Zacks Consensus Estimate is at $3.06.
That is a difference of -0.33%.
Zacks Rank #3 (Hold): IBM's Zacks Rank #3
(Hold) lowers the predictive power of ESP because the Zacks Rank #3
when combined with a negative ESP makes surprise prediction
difficult. We caution against stocks with Zacks Rank #4 and #5
(Sell rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Other Stocks to Consider
LinkedIn Corp ( LNKD ) has an Earnings
ESP of +300.0% and a Zacks Rank #2 (Buy).
Amazon.com ( AMZN ) has an
Earnings ESP of +100.0% and Zacks Rank #3 (Hold).AMAZON.COM INC (AMZN): Free Stock Analysis
ReportINTL BUS MACH (IBM): Free Stock Analysis ReportLINKEDIN CORP-A (LNKD): Free Stock Analysis
ReportORACLE CORP (ORCL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment