IBM stock flattened out at $121.56 as of 10:43 AM EDT on Wednesday.
Finding market-beating equities is the main goal of stock selection. Even the finest stock picker, however, will only succeed with some choices. Given the 17% share price decline over the past five years, some shareholders may now be second-guessing their investment in International Business Machines Corporation (NYSE:IBM). With IBM stock down by 14% over the past 90 days, investors have recently had an even worse time.
A flawed but straightforward technique to assess how the market’s view of a company has changed is to contrast the change in earnings per share (EPS) with the movement of the share price.
International Business Machines’ profits per share (EPS) fell by 12% annually throughout the five years that the share price decreased. The 4% annual share price decrease is not as terrible as the EPS decline. The market’s expectation that the firm will improve may be the source of the comparatively modest share price response.
It’s probably important to note that we saw a lot of insider buying in the most recent quarter, which we view favorably. However, we believe that patterns in earnings and revenue growth are much more crucial to take into account. Always carefully review historical growth trends before buying or selling a stock.
IBM’s TSR for the past five years was 10%, surpassing the previously indicated share price return. This is due partly to the dividends it pays out!
IBM Stock Analysis
IBM stock lost 3.1% over the past year, and the overall market performed worse, losing 23%. The good news is that over five years, IBM stock has returned 2% annually. Of course, long-term gains are significantly more crucial. The past year is, in the best-case scenario, only a brief hiccup on the road to a better future. Looking at IBM stock price as a long-term proxy for company performance intrigues me much.
Featured Image- Megapixl @ Geografas