IBM Earnings Preview: Big Blue Takes the Stage Wednesday After the Close

Tech giant IBM reports second-quarter earnings after market close on Wednesday, July 18. IBM has returned to revenue growth in recent quarters, but its stock still lags the S&P 500 year to date.

Print and woman working in a server room
4 min read

As the tech sector has continued to outperform the S&P 500 (SPX) in 2018, IBM’s performance has lagged both so far this year. 

For almost six years, IBM had been consistently posting revenue declines. It finally broke its 22-quarter streak in the fourth quarter of 2017, and now has two quarters of revenue growth under its belt heading into its earnings report on Wednesday, July 18, after market close.  

When it reports Q2 results, IBM is expected to report adjusted EPS of $3.03, up from $2.97 in the year-ago quarter, on revenue of $19.88 billion, according to third-party consensus analyst estimates. Revenue is projected to grow 3.1% year over year, from $19.29 billion in Q2 2017. 

To return the company to consistent revenue growth, IBM has said it has been focused on what it calls its “Strategic Imperatives”, which encompasses cloud computing, data analytics, mobile technologies and security. 

In Q1, IBM reported that Strategic Imperatives revenue grew 10% year over year to $9 billion, accounting for a little less than half of the $19.1 billion in total revenue. Cloud revenue, which the company includes in Strategic Imperatives but also breaks out separately, came in at $4.2 billion, up 14% year over year. 

Despite some signs of improvement across different business lines in recent quarters, analysts have expressed concerns that gross margins declined almost across the board in Q1 2018, except for in the global financing division.  Many analysts have indicated this inconsistency in results has kept them on the sidelines until they start to see margins expand and revenue continue to stabilize. 

 IBM 2018 STOCK CHART. IBM is down 5.7% year to date, lagging both the S&P 500 (SPX) and the Dow ($DJI). IBM has been trading in a tighter range since mid-April and has faced some resistance around the $147 level. Chart source: thinkorswim® by TD Ameritrade.   Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

IBM Trading Activity

IBM gapped down after both of its last two reports, although it was trading at a higher price heading into both.  The stock was at $169.12 before its Q4 2017 earnings report, and opened at $164.46 the day after releasing results; it closed at $160.91 before its Q1 2018 report, and opened at $152.14 the day after. 

Around the upcoming earning release, options traders have priced in about a 4.1% stock move in either direction, according to the Market Maker Move indicator on the thinkorswim® platform. Implied volatility was at the 57th percentile as of this morning.

In short-term trading at the July 20 monthly expiration, volume has been higher on the call side, with trading concentrated at the 145 and 146 strike prices. There’s also been higher volume at the 152.5 strike, a decent ways out of the money. On the put side, both the 142 and 145 strike prices have been more active over the past few sessions.  

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.

What’s Coming Up

Microsoft (MSFT) reports after market close on Thursday, July 19 and General Electric (GE) takes the stage before the open on Friday, July 20. 

Next week is jam-packed with reports from major companies across sectors. Some of the names on the docket include Alphabet (GOOG, GOOGL), Boeing (BA), Facebook (FB), McDonald’s (MCD), AT&T (T), ExxonMobil (XOM) and Amazon (AMZN). 

For a look at what else is going on, make sure to check out today’s Market Update if you have time.

Good Trading,

Visit the TD Ameritrade Markets Overview page for timely market information, articles, snapshots, earnings releases, and more.

Looking to stay on top of the markets on a daily basis? Check out my Daily Market Update on the Ticker Tape.  Or tune into the TD Ameritrade Network, which is live programming that brings you market news and helps you hone your trading knowledge.

The TD Ameritrade Network is brought to you by TD Ameritrade Media Productions Company. TD Ameritrade Media Productions Company and TD Ameritrade, Inc. are separate but affiliated subsidiaries of TD Ameritrade Holding Corporation.
Call Us
Probability analysis results from the Market Maker Move indicator are theoretical in nature, not guaranteed, and do not reflect any degree of certainty of an event occurring.
TD Ameritrade and all third parties mentioned are separate and unaffiliated companies, and are not responsible for each other’s policies or services.
Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.


Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.

Scroll to Top