Don’t Even Bother With IBM Stock

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Earlier this week, International Business Machines Corp. (NYSE:IBM) reported mixed fourth-quarter earnings.

IBMCould now be a good opportunity to buy IBM shares on a dip, or is IBM stock too far gone to consider?

IBM Company Profile

IBM is a one-stop shop for about any technology solution that a business might need — from hardware, software, services and ongoing support. IBM spends a lot of money on research and development, has one of the most recognizable brands and is still the second largest company in the industry.

IBM has gone to great efforts to increase shareholder value, including an aggressive share buyback program and a two-decade track record of annual dividend increases. At current prices, IBM pays a 2.9% dividend.

IBM Earnings Rundown

Despite an impressive stock buyback program and dividend payouts, IBM failed to impress in the fourth quarter. IBM reported a 4% drop in net income at $5.54 per share, compared to last year.

Meanwhile, revenue dipped 12% to $24.11 billion. Analysts expected an earnings of $5.41 per share on revenue of $24.77 billion. For fiscal year 2014, net income from continuing operations was down 7% at $15.8 billion, and EPS was $15.59.

Looking ahead, in fiscal year 2015 IBM expects operating EPD in the range of $15.75 to $16.50.

IBM Current Ratings

IBM has spent the past few months in “sell” territory. And that’s not surprising, right now, IBM earns an F for its Quantitative Grade, indicating dismal buying pressure — this is a measure of IBM stock’s risk-to-return ratio.

On the fundamentals side, IBM averages a C-rating. IBM outright fails in sales growth and earnings surprises, while earnings growth and analyst earning revisions earn D-grades. IBM earn (D. Meanwhile, earnings momentum and operating margin growth earn lackluster C-grades. However, IBM does score well on cash flow and return on equity, earning A-grades.

IBM is still a ways away from graduating to a “buy.” As of this posting, I consider IBM a D-rated “sell.”

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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