International Business Machines Corporation ($IBM) Earnings (Q3 FY22)

 International Business Machines Corporation ($IBM) Earnings and Opinion:


IBM is a company in the Technology sector and operates in the Information Technology Services industry. The company provides integrated solutions and services worldwide. IBM was incorporated in 1911 and is currently headquartered in Armonk, New York. The company made its debut on the stock market 1970.

IBM Earnings Results:

  •  Revenue of $14.107B beating expectations of $13.53B
  • Revenue growth of 15% beating expectations of 11.5%
  • Adj Gross Profit of $7.6B beating expectations of $7.5B
  • Gross Margin of 53.8% missing expectations of 55.28%
  • Adj EPS of $1.81 in line with expectations of $1.81
Opinion:
IBM is currently moving higher in todays trading session. The company reported earnings after the market closed yesterday afternoon. IBM definitely has some positive sentiment after this report, but there was some interesting metrics that may require some deep diving into. The quarter was "impressive", however the company is facing some pretty tough issues with macroeconomic conditions and currency issues with international currencies. The strong US dollar is playing a role in lowering margins and also affecting profits. The company had a net loss of $3.2B this quarter, that was claimed to be from a $5.9B pre-tax charge. The revenue looked to be pretty solid this quarter, but profits were right in line with expectations. I want to see how well they do with hedging some of this currency in the coming quarter and how it will play out with profits in the next earnings report. As far as valuation goes, the company is a slight bit overvalued. The P/E ratio sits right around 16.01. The EV/EBITDA sits at 8.19, which is higher than the median at 15.50. In my opinion, I think IBM has a potential of taking off. However, they are a pretty risky bet when it comes to the AI. They saw revenue growth, but it was mostly from their software sales, when they are trying to grow their AI business right now. If you have a good background with AI, and know what IBM is doing with it, you're in a better position than I am. I think IBM is definitely a good play in the future, and one of the leaders in AI. I am long $IBM, but I want to see some changes happen. 


*information from Bloomberg and Yahoo Finance

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