One Reason IBM (IBM) Stock Is Higher Today

NEW YORK (TheStreet) -- Shares of IBM (IBM) are slightly higher at $164.58 in pre-market trading today after the company named Martin Jetter as senior VP and head of its global technology services unit, Reuters reports.

Jetter now heads IBM's operations in Japan and will initially report to Erich Clemanti and will succeed him as head of the services unit on Jan. 1, when Clemanti will move to another senior leadership role, according to an internal IBM memo seen by Reuters.

"Martin has led a remarkable transformation of IBM Japan, returning it to growth - as he did previously as our leader of IBM Germany and GBS in Europe. In each case, he and his team have moved quickly to embrace new approaches and new thinking," IBM CEO Ginni Rometty wrote in the note.

IBM, the world's largest technology services company, is struggling to keep up with shifts in the industry as hardware becomes increasingly commoditized. The company, once best known for mainframe computers, has been pivoting to higher-margin businesses such as security software and cloud services, but growth in those areas has failed to offset weakness elsewhere, Reuters said.

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 their 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 notable return on equity, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. 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.
  • Net operating cash flow has slightly increased to $3,904.00 million or 3.82% when compared to the same quarter last year. In addition, INTL BUSINESS MACHINES CORP has also modestly surpassed the industry average cash flow growth rate of -4.08%.
  • INTL BUSINESS MACHINES CORP's earnings per share declined by 8.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTL BUSINESS MACHINES CORP increased its bottom line by earning $15.34 versus $14.41 in the prior year. This year, the market expects an improvement in earnings ($16.15 versus $15.34).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.6%. Since the same quarter one year prior, revenues slightly dropped by 4.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for INTL BUSINESS MACHINES CORP is rather high; currently it is at 54.21%. Regardless of IBM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.08% trails the industry average.
  • You can view the full analysis from the report here: IBM Ratings Report
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More from Markets

3 Hot Reads From TheStreet's Top Premium Columnists

3 Hot Reads From TheStreet's Top Premium Columnists

Dow Falls, S&P 500 Trades Lower as P&G and Apple Slump

Dow Falls, S&P 500 Trades Lower as P&G and Apple Slump

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer on Apple, Procter & Gamble, Nucor and Acacia Communications

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Video: Jim Cramer Reveals Why Stocks Are Moving Lower Thursday

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla