Why IBM (IBM) Is Rising Today

Update (4:08 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- IBM (IBM) rises 0.58% to $189.86, up $1.10 from its previous close of $188.76, at the close of the trading day on Friday after the company announced it would invest more than $1.2 billion in 15 data centers around the world.

The stock had a volume of 6,053,661, slightly above its average of 5,325,610. It hit a high of $190.81 and a low of $187.90 for the day.

The tech giant revealed its plan to construct the data centers across five continents in an effort to increase its cloud services and reach new customers and markets. The new cloud centers would be located in Washington, Dallas, China, Hong Kong, Japan, India, Mexico City, London and Canada; IBM plans to add data centers in the Middle East and Africa in 2015.

The company said in a statement that the project would increase its number of data centers to 40 in 2014 and would double the cloud capacity of SoftLayer, the foundation of IBM's cloud computing expansion that Big Blue acquired last summer.

"This global expansion is aimed at accelerating into new markets based on growing client demand for high-value cloud," IBM said in a statement.

IBM also noted in a report that estimates call for the global cloud market to reach $200 billion by 2020.

TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:

"We rate INTL BUSINESS MACHINES CORP (IBM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, notable return on equity, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • INTL BUSINESS MACHINES CORP has improved earnings per share by 10.5% in the most recent quarter compared to the same quarter a year ago. 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 ($16.90 versus $14.41).
  • 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.
  • The gross profit margin for INTL BUSINESS MACHINES CORP is rather high; currently it is at 53.54%. 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 17.03% trails the industry average.
  • The net income growth 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 increased by 5.7% when compared to the same quarter one year prior, going from $3,823.00 million to $4,041.00 million.
  • Despite the weak revenue results, IBM has outperformed against the industry average of 22.8%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: IBM Ratings Report

More from Markets

Global Stocks Slide as Yield Pressure, Commodity Surge Prompts Equity Exit

Global Stocks Slide as Yield Pressure, Commodity Surge Prompts Equity Exit

Asian Markets Decline in Morning Trading

Asian Markets Decline in Morning Trading

Verizon Proves Resilient in Sell-Off; Decoding the Facebook Short -- ICYMI

Verizon Proves Resilient in Sell-Off; Decoding the Facebook Short -- ICYMI

Three Big Factors That Rocked the Stock Market Tuesday

Three Big Factors That Rocked the Stock Market Tuesday

Dow Tumbles Over 400 Points; S&P 500 and Nasdaq Also Finish Lower

Dow Tumbles Over 400 Points; S&P 500 and Nasdaq Also Finish Lower