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IBM Posts Mediocre Quarter; Shares Fully Valued

Management is optimistic that results will look better in the second half of 2017, but we think investors should wait for a bigger discount before buying.

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IBM reported a mediocre second-quarter result. Revenue growth was slightly softer than we had expected due to some currency impacts, while earnings per share growth showed some resiliency, given the company's share-repurchase program and discrete tax benefits.

IBM has been focused on growing revenue from its strategic imperatives including social, mobile, analytics, cloud, and security technologies, but revenue growth in these areas showed a marked year-over-year slowdown, growing only 7% in constant currency to $8.8 billion.

Andrew Lange does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.