ETFs To Buy On IBM's Annual Revenue Growth Story

After the closing bell on Tuesday, International Business Machines (IBM - Free Report) posted better-than-expected fourth-quarter 2018 results buoyed by growth in new businesses.

Earnings per share came in at $4.87, well above the Zacks Consensus Estimate of $4.81 but below the year-ago earnings of $5.14. Revenues fell 3.5% year over year to $21.76 billion but edged past the estimated $21.74 billion. This marked the second consecutive quarter of revenue decline after two consecutive quarters of growth in the first half of 2018.

Notably, IBM posted its first annual revenue growth since 2011, reflecting a shift toward faster-growing segments such as cloud, software, and services from traditional hardware products under chief executive officer, Ginni Rometty. Most analysts believe the ongoing growth of the Strategic Imperatives unit will help IBM return to organic growth in 2019.

The world’s largest computer-services provider guided full-year earnings of “at least $13.90” a share. The Zacks Consensus Estimate is pegged at $13.86 for this year, indicating a modest 0.58% growth from the last year.

Based on solid results, shares of IBM climbed 7% in after-market hours on elevated volume. The stock has a Zacks Rank #3 (Hold) and boasts a top Value Score of A. It also belongs to a top-ranked Zacks industry (top 30%).

ETFs to Watch

IBM is expected to see smooth trading in the days ahead. Investors could tap the opportunity with ETFs having the highest allocation to this tech giant:

First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report)

This fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $864.8 million in its asset base while trading in volume of around 94,000 shares per day. It charges 50 bps in annual fees and holds about 97 securities in its basket. Of these firms, IBM takes the second spot, making up roughly 8.2% of the assets. In terms of industrial exposure, the fund allocates about 25.4% of the portfolio in software & IT services, followed by semiconductor and semiconductor equipment (23%), and telecom services (21%).

1 2
View single page >> |

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.