Dividend yield has shot higher. Valuation is rather fair.
Don't forget the Apple deal. It starts soon.
In recent days, shares of Dow component IBM (NYSE:IBM) have taken a hit after reporting third-quarter earnings. The company missed on both the top and bottom lines by a significant amount and offered poor guidance for this year and next. There have been plenty out there that have said it is time to bail on this name, including a number of articles on this site. Today, I'm going to take the opposite view, discussing why now may be the time to buy IBM.
Lowered estimates:
The company stated that EPS from continuing operations will be down 2-4% year over year, implying a range of $15.97 to $16.30. That range was well below the consensus at the time of $17.87. The company also stated that it would not be able to achieve $20 of EPS from operations in 2015.
Obviously, this guidance means that analyst EPS estimates must come down for both this year and next. In the table below, you can see how they have started to already, with the "current" number below as of Tuesday.
