IBM's Consistency Becomes Key

SAN FRANCISCO -- IBM's(IBM Quote) second-quarter results later Thursday should come in healthy across its business lines, with special help from a new mainframe server.

The consensus estimate of analysts polled by Thomson Reuters is for revenue growth of 9% to $25.92 billion and earnings growth of 21% to $1.82 a share, excluding special items.

Shares of IBM have clawed their way back from a low of $97.59 early in the year, closing Wednesday at $125.94, just shy of its one-year high of $129.99, recorded at the end of May.

"It's been a stellar stock this year," says Chuck Jones, a buy-side analyst at Atlantic Trust Private Wealth Management. He lauded its gain of greater than 17% since the end of 2007, while the Nasdaq has lost ground.

The firm acquired 153,000 shares during the first quarter, for a total of nearly 620,000 at the end of March.

"At 13 times forward earnings -- in relation to the market -- it is a bit undervalued," Jones says.

"The company's pretty consistent, and we expect them to be consistent even with some economic news in sectors such as banking," said Chris Foster, lead analyst on IBM at Technology Business Research. "The highlights will be in software and services. Hardware looks to be flat."

But investors also will be looking to IBM's results for the health of the tech sector overall.

"They're a very good barometer for the rest of the industry, because of the nature of longer-term deals," Foster said. "They will be a very good measure of how other companies are going to report."