Fool Checkup: International Business Machines Earnings

International Business Machines (NYSE: IBM  ) reported earnings on Oct. 16. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), International Business Machines missed estimates on revenues and met expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank and GAAP earnings per share increased.

Gross margins grew, operating margins dropped, net margins increased.

Revenue details
International Business Machines reported revenue of $24.75 billion. The 22 analysts polled by S&P Capital IQ looked for net sales of $25.38 billion on the same basis. GAAP reported sales were 5.4% lower than the prior-year quarter's $26.16 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $3.62. The 24 earnings estimates compiled by S&P Capital IQ anticipated $3.61 per share. GAAP EPS of $3.33 for Q3 were 4.4% higher than the prior-year quarter's $3.19 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 47.4%, 90 basis points better than the prior-year quarter. Operating margin was 18.6%, 160 basis points worse than the prior-year quarter. Net margin was 15.5%, 80 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $29.38 billion.

Next year's average estimate for revenue is $105.25 billion. The average EPS estimate is $15.15.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 4,215 members out of 4,642 rating the stock outperform, and 427 members rating it underperform. Among 1,028 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 961 give International Business Machines a green thumbs-up, and 67 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on International Business Machines is outperform, with an average price target of $215.57.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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