What to Expect When IBM Reports First Quarter Earnings Today

NEW YORK (TheStreet) -- Shares of International Business Machines  are up 1.85% to $163.65 in mid-morning trading Monday, ahead of the company's first quarter earnings release today after the market close. For the first quarter, analysts expect IBM to report earnings of $2.82 per share, up from the $2.68 per share the company posted in the same quarter of last year. Analysts expect revenue of $19.73 billion for the period, lower than the $22.48 billion IBM reported a year ago. Armonk, NY-based IBM is an information technology company operating in five segments including global technology services, global business services, software, systems and technology and global financing. Insight from TheStreet's Research Team: Skip Raschke, a member of TheStreet's Options Profits Team commented on IBM in a recent post. Here is what he had to say about the stock: IBM (IBM) will report earnings after the close of trading today. Since last October, the stock has traded in a tight range of $150 to $165 (rounded). Thus, that adds up to about eight months of trading in a 15-point band. These earnings have low and high guesses (by well-paid financial analysts that work for big-named firms) of $2.57 per share on the low side, and a "whistle and party hat" $3.01 on the uber up side. Now, given the lack of pop for its stock's price since said October, one would be inclined to favor the lower side of the guesses for earnings results. But, taking that low road breaks two "street" dicta,: 1) stocks discount earnings to, at best, six months hence; and 2) what is obvious is obviously wrong. Fundamentally speaking, IBM will earn near or more than $16 per share in 2015. IBM currently pays a quarterly dividend of $1.10. Thus, not to at least respect an albeit low probability of IBM raising its dividend now/soon is not trader-wise. That one potential alone is what hits me when I see that less than 3% of IBM's float is sold short. In other words, for some reason(s) plenty of traders are avoiding being short IBM now. Technically, my take on the one-year stochastic and RSI for IBM now is that, while both have been in a bearish mode for the past 3+ weeks, these patterns are not those I prefer to see in a stock that I deem as being a shorting candidate. The trade tactic I prefer now for IBM is the out-of-the-money call calendar spread. This tactic lean a bit bearish at inception, but can find itself morphed into leaning bullish, should the stock move up towards the strike price over time. As for degree of risk relative to the potential reward of this trade I would rate that risk as high. Thus, the trade is a caveat emptor type! Trades: Sell to open IBM Jun 170 calls at $1.50 and buy to open IBM Jul 170 calls for $2.00. The total risk for the spread is $0.50. The suggested target to close for a gain is a bid of $1.00. The risk of $0.50 negates using a stop loss target. AS ALWAYS, this is a guideline and you should always stick to your trading plan and what's best for your risk/reward tolerance. - Skip Raschke, 'Skip Raschke Intermediate Trade: IBM' originally published 4/20/2015 on OptionsProfits.com. Want more information like this from Skip Raschke BEFORE your stock moves? Learn more about OptionsProfits.com now. Separately, TheStreet Ratings team rates INTL BUSINESS MACHINES CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation: "We rate INTL BUSINESS MACHINES CORP (IBM) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow." You can view the full analysis from the report here: IBM Ratings Report Must Read: Warren Buffett's Top 25 Stocks for 2015

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