Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- International Business Machines (NYSE: IBM) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its notable return on equity, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the IT Services industry and the overall market, INTL BUSINESS MACHINES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- INTL BUSINESS MACHINES CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, INTL BUSINESS MACHINES CORP increased its bottom line by earning $14.41 versus $13.12 in the prior year. This year, the market expects an improvement in earnings ($16.70 versus $14.41).
- The gross profit margin for INTL BUSINESS MACHINES CORP is rather high; currently it is at 51.20%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.95% trails the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 13.0%. Since the same quarter one year prior, revenues slightly dropped by 5.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The change in net income from the same quarter one year ago has exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income has decreased by 1.1% when compared to the same quarter one year ago, dropping from $3,066.00 million to $3,032.00 million.
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