Can Healthy Consulting Revenues Aid IBM This Earnings Season?
International Business Machines Corporation IBM is scheduled to report fourth-quarter 2022 results on Jan 25, after the closing bell. In the quarter, the company is likely to have recorded healthy revenues from the Consulting segment with significant traction from the Technology Consulting business.
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 quarter, IBM collaborated with Vodafone Group to focus more on quantum-safe cybersecurity issues. Leveraging cloud access to IBM's advanced quantum computing systems and its industry-leading quantum expertise, Vodafone aims to help validate and progress potential quantum use cases in telecommunications.
The company further expanded its partner relationships in AI, network automation and security to help the telecommunications industry evolve as 5G and Edge Computing take center stage. During the to-be-reported quarter, IBM inked a partnership with Rapidus to develop logic scaling technology as part of Japan's initiatives to become a global leader in semiconductor research, development and manufacturing. Per the agreement, Rapidus and IBM will work on IBM's breakthrough 2 nanometer (nm) node technology for innovative product development initiatives. These are likely to have driven incremental revenues in the Consulting segment in the fourth quarter.
Overall Expectations
The Zacks Consensus Estimate for revenues from Consulting is pegged at $4,564 million.
The consensus estimate for total revenues for the company stands at $15,548 million. It generated revenues of $16,695 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $3.60 per share, indicating an improvement from $3.35 in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for IBM this time around. 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 perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.90%, with the former pegged at $3.67 and the latter at $3.60. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Zacks Rank: IBM currently has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
Motorola Solutions Inc. MSI is set to release quarterly numbers on Feb 8. It has an Earnings ESP of +0.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Applied Materials Inc. AMAT is +0.17% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 15.
The Earnings ESP for Meta Platforms, Inc. META is +6.88% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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International Business Machines Corporation (IBM) : Free Stock Analysis Report
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
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