After yesterday’s close, IBM reported Q3 EPS of $2.40 versus $2.05 and said it expects to have full year results of at least $9.85 /share – up from 2008’s $8.93. You’d think that would have been received well but instead, the shares dropped by $6.34 (-4.95%) today to close at $121.64.
Here are IBM’s per share numbers from the past few years as reported by Value Line:
|Year||Sales||C/F||EPS||Div.||Avg. P/E||Avg. Yield|
While it’s unlikely that IBM will bounce back to the high teens multiples of 2002-2004 it does seem logical that 14x earnings might be the new normal as the economy gradually recovers. That would put my one-year target at about $150 /share. Standard and Poors sees things similarly with their 12-month goal of $147.
IBM gets S & P’s top, 5-star ranking and garners Value Line’s A++ financial strength rating along with 95th and 100th percentile marks for ‘stock price stability’ and ‘earnings predictability’(with 100th being best).
The dividend has been increased in each year since 1995 and the well covered $0.55 quarterly payout is now a 1.81% current yield.
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