International Business Machines Corporation IBM is scheduled to report third-quarter 2024 earnings on Oct. 23. In the to-be-reported quarter, the company is likely to have recorded higher revenues from the Consulting segment backed by rising demand for technology consulting and business transformation services.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Factors at Play
The Consulting segment comprises Business Transformation, Technology Consulting and Application Operations. It provides consulting and application management services that offer value and innovation to clients by leveraging industry, technology and business strategy, and process know-how.
During the to-be-reported quarter, IBM augmented the generative artificial intelligence (AI) capabilities of its managed Threat Detection and Response Services with the launch of the IBM Consulting Cybersecurity Assistant. Designed to accelerate and improve the identification, investigation and response to critical security threats, the Cybersecurity Assistant will form an integral part of IBM's watsonx data and AI platform along with IBM Consulting Advantage. This, in turn, is expected to empower IBM consultants to respond more proactively and precisely to critical cyber threats with consistency, repeatability, quality and agility.
In the third quarter, IBM inked an agreement to acquire Accelalpha, a global expert at implementing, integrating and managing Oracle Cloud Applications. With this buyout, IBM aims to strengthen its Oracle consulting expertise across key areas, including supply chain and logistics, finance, enterprise performance management (EPM) and customer transformation. Post-acquisition, IBM will integrate Accelalpha’s large global team of skilled consultants within its infrastructure, enabling the company to help its clients deploy and manage cutting-edge Oracle solutions, including generative AI and cloud technology. This advancement is anticipated to improve IBM’s productivity and deliver increased competitive advantages to its clients through Oracle’s Cloud applications and technology.
During the quarter, IBM secured a five-year contract from the U.S. Agency for International Development (“USAID”) to support its Cybersecurity Protection and Response program. Per the contract, IBM will help USAID expand and enhance its cybersecurity response support for host governments in the Europe and Eurasia region. IBM's multidisciplinary team will provide the continuous assistance needed to help USAID strengthen its critical infrastructure to identify, protect, detect, respond and recover from cyberattacks. These are likely to have generated incremental revenues in the Consulting segment.
Overall Expectations
The Zacks Consensus Estimate for Consulting revenues is pegged at $5.22 billion, indicating an improvement from $4.96 billion in the year-ago quarter. Our estimate for revenues from Consulting is pegged at $5.19 billion, suggesting a 0.2% improvement year over year.
The Zacks Consensus Estimate for total revenues for the company stands at $15.14 billion. It generated revenues of $14.75 billion in the prior-year quarter. The consensus mark for earnings is currently pegged at $2.27 per share, indicating growth from $2.20 in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for IBM for the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
IBM currently has an ESP of -2.43% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Corning Incorporated GLW is set to release quarterly numbers on Oct. 29. It has an Earnings ESP of +1.08% and carries a Zacks Rank #3.
The Earnings ESP for Uber Technologies Inc. UBER is +50.00% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Oct. 31.
The Earnings ESP for PayPal Holdings, Inc. PYPL is +1.92% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct. 29.
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