The tech giant is finally showing slight signs of progress.
International Business Machines share had gone up by 12% so far this year, according to data provided by S&P Global Market Intelligence. Big Blue stock had been in an abyss for a long time now primarily due to its sluggish performance which couldn't prevent revenue from going down. The poor growth had negative impact on the company's stock and the tech giant has always seen its stock at the lowest.
But the winds changed in early 2016 and IBM is undergoing a strong recovery which can be reflected in its soaring stock price. Back in January when the tech firm disclosed its fourth quarter financial results, it amazed the analysts by beating their estimates. However, the 2016 guidance of close to $13.5 per share in adjusted earnings showed a decline in comparison to 2015. The gap in guidance was mainly due to the currency exchange rates however in addition to it, the tech titan also highlighted the delay in software signings impacted negatively on its financials.
Back in February, IBM stock hit the rock and dropped below $120 per share. Since then, however, the tech giant managed to rise up for a few reasons. In addition to the weak results of the tech firm, the company's single-digit PE ratio is pessimistic, and naturally the investors took advantage of the low price.
Over the past few months, the company had made multiple acquisitions which has attracted a lot of investors towards the company. Earlier this year in February, Big Blue acquired Truven Health Analytics for sum of $2.6 billion. The move was taken to integrate the company's data and technology into its Watson Health business unit. In the same month, another acquisition was made and Resilient Systems -a cybersecurity company was acquired by the tech giant. This positively boosted the company's fast-growing security business.
In the following month, March, two more acquisitions were made by the company. These included a cloud software integrator -Optevia, and a cloud software consulting company -Bluewolf Group. The recent acquisitions clearly showed that the tech giant wasn't only planning to begin a rivalry with already established market players like Amazon's AWS but it was also looking forward to work on the areas which can help it to bring value to its prestigious clients through its cloud strategy.
A month later in April, a strong first-quarter report allowed the company to continue treading on the current path of acquisitions and maintain the gains. For the same results, IBM outperformed analysts estimates and boosted its free cash flow guidance. A tax benefit worth $1.2 billion did smudge company's results a bit but the same was fully offset by one-time restructuring charges.
Although the stock has risen up a bit but in comparison to what the stock has performed in the past year, its valuation is still quite low. The company is indeed showing progress and the analysts and investors have set their eyes to see the company produce substantial growth. Since previously, IBM had not been able to give modest performance therefore a lot of pessimism is still around the company. It may take years for the company's strategy to pay off and let the tech giant to finally produce some growth.
At the market which closed on Friday, International Business Machines Corporation stock stood at a price of $146.56. The 52 week range of the stock is $117 to $174.