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Growth Across Key Segments Led by Hybrid Cloud Adoption; Solid Cash and Profit Generation
ARMONK, N.Y., July 18, 2022 /PRNewswire/ -- IBM (NYSE: IBM) today announced second-quarter 2022 earnings results.
"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well," said Arvind Krishna, IBM chairman and chief executive officer. "With our first half results, we continue to expect full-year revenue growth at the high end of our mid-single digit model."
Second-Quarter Highlights
- Revenue
- Revenue of $15.5 billion, up 9 percent, up 16 percent at constant currency (about 5 points from sales to Kyndryl)
- Software revenue up 6 percent, up 12 percent at constant currency (about 7 points from sales to Kyndryl)
- Consulting revenue up 10 percent, up 18 percent at constant currency
- Infrastructure revenue up 19 percent, up 25 percent at constant currency (about 7 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16 percent, up 19 percent at constant currency - Cash Flow
- On a consolidated basis, year to date, net cash from operating activities of $4.6 billion; free cash flow of $3.3 billion
| SECOND QUARTER 2022 INCOME STATEMENT SUMMARY | ||||||||||||||||||
| Pre-tax | ||||||||||||||||||
| Gross | Pre-tax | Income | Net | Diluted | ||||||||||||||
| Revenue | Profit | Income | Margin | Income | EPS | |||||||||||||
| GAAP from Continuing Operations |
$ | 15.5B | $ | 8.3B | $ | 1.7B | 11.1 | % | $ | 1.5B | $ | 1.61 | ||||||
| Year/Year | 9 | %* | 6 | % | 89 | % | 4.7 | Pts | 81 | % | 79 | % | ||||||
| Operating (Non-GAAP) |
$ | 8.5B | $ | 2.5B | 16.2 | % | $ | 2.1B | $ | 2.31 | ||||||||
| Year/Year | 5 | % | 48 | % | 4.2 | Pts | 45 | % | 43 | % | ||||||||
| *16% at constant currency | ||||||||||||||||||
"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend."
Segment Results for Second Quarter
- Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at constant currency (about 7 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 4 percent, up 9 percent at constant currency (about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 17 percent at constant currency
-- Automation up 4 percent, up 8 percent at constant currency
-- Data & AI flat, up 4 percent at constant currency
-- Security flat, up 5 percent at constant currency
- Transaction Processing up 12 percent, up 19 percent at constant currency (about 22 points from sales to Kyndryl)
- Software segment hybrid cloud revenue up 14 percent, up 18 percent at constant currency - Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.8 billion, up 9.8 percent, up 17.8 percent at constant currency:
- Business Transformation up 9 percent, up 16 percent at constant currency
- Technology Consulting up 14 percent, up 23 percent at constant currency
- Application Operations up 9 percent, up 17 percent at constant currency
- Consulting segment hybrid cloud revenue up 20 percent, up 29 percent at constant currency - Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at constant currency (about 7 points from sales to Kyndryl):
- Hybrid Infrastructure up 34 percent, up 41 percent at constant currency (about 7 points from sales to Kyndryl)
-- IBM z Systems up 69 percent, up 77 percent at constant currency
-- Distributed Infrastructure up 11 percent, up 17 percent at constant currency
- Infrastructure Support down 2 percent, up 5 percent at constant currency (about 8 points from sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue up 24 percent, up 30 percent at constant currency - Financing (includes client and commercial financing)— revenues of $0.1 billion, down 29.9 percent, down 26.6 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis, in the second quarter, the company generated net cash from operating activities of $1.3 billion or $2.6 billion excluding IBM Financing receivables. IBM's free cash flow was $2.1 billion. The company returned $1.5 billion to shareholders in dividends in the second quarter.
On a consolidated basis, for the first six months of the year, the company generated net cash from operating activities of $4.6 billion or $4.2 billion excluding IBM Financing receivables. IBM's free cash flow was $3.3 billion, which includes cash impacts from the company's structural actions initiated at the end of 2020.
IBM ended the second quarter with $7.8 billion of cash on hand (which includes marketable securities), up $0.2 billion from year-end 2021. Debt, including IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4 billion since the end of 2021.
Full-Year 2022 Expectations
- Revenue growth: The company continues to expect constant currency revenue growth at the high end of its mid-single digit model. The company also expects an additional 3.5 point contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, currency is expected to be about a six-point headwind.
- Free Cash Flow: The company now expects about $10 billion in consolidated free cash flow.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause genuine results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities, and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters, tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise specified, results are presented on a continuing operations basis. All references to revenue impacts from sales to Kyndryl are incremental sales post-separation.
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:
IBM results —
- adjusting for currency (i.e., at constant currency);
- presenting operating (non-GAAP) earnings per share amounts and related income statement items;
- consolidated free cash flow;
- consolidated cash from operating activities excluding IBM Financing receivables;
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8‑K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-2q22. Presentation charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
Contact: IBM
Sarah Meron, 347 891 1770
sarah.meron@ibm.com
Tim Davidson, 914 844 7847
tfdavids@us.ibm.com
| INTERNATIONAL BUSINESS MACHINES CORPORATION COMPARATIVE FINANCIAL RESULTS (Unaudited; Dollars in millions except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2022 | 2021* | 2022 | 2021* | |||||||||||||
| REVENUE | ||||||||||||||||
| Software | $ | 6,166 | $ | 5,795 | $ | 11,938 | $ | 10,933 | ||||||||
| Consulting | 4,809 | 4,378 | 9,637 | 8,641 | ||||||||||||
| Infrastructure | 4,235 | 3,560 | 7,453 | 6,853 | ||||||||||||
| Financing | 146 | 209 | 300 | 417 | ||||||||||||
| Other | 180 | 277 | 404 | 561 | ||||||||||||
| TOTAL REVENUE | 15,535 | 14,218 | 29,732 | 27,405 | ||||||||||||
| GROSS PROFIT | 8,290 | 7,852 | 15,625 | 14,879 | ||||||||||||
| GROSS PROFIT MARGIN | ||||||||||||||||
| Software | 79.2 | % | 79.7 | % | 79.0 | % | 78.8 | % | ||||||||
| Consulting | 24.2 | % | 27.6 | % | 24.3 | % | 27.7 | % | ||||||||
| Infrastructure | 53.8 | % | 57.1 | % | 52.4 | % | 56.7 | % | ||||||||
| Financing | 35.3 | % | 29.9 | % | 36.5 | % | 32.7 | % | ||||||||
| TOTAL GROSS PROFIT MARGIN | 53.4 | % | 55.2 | % | 52.6 | % | 54.3 | % | ||||||||
| EXPENSE AND OTHER INCOME | ||||||||||||||||
| S,G&A | 4,855 | 4,849 | 9,452 | 9,536 | ||||||||||||
| R,D&E | 1,673 | 1,641 | 3,352 | 3,257 | ||||||||||||
| Intellectual property and custom development income | (176) | (133) | (297) | (278) | ||||||||||||
| Other (income) and expense | (81) | 302 | 166 | 647 | ||||||||||||
| Interest expense | 297 | 281 | 607 | 561 | ||||||||||||
| TOTAL EXPENSE AND OTHER INCOME | 6,568 | 6,940 | 13,280 | 13,724 | ||||||||||||
| INCOME/(LOSS) FROM CONTINUING OPERATIONS | ||||||||||||||||
| BEFORE INCOME TAXES | 1,722 | 912 | 2,345 | 1,155 | ||||||||||||
| Pre-tax margin | 11.1 | % | 6.4 | % | 7.9 | % | 4.2 | % | ||||||||
| Provision for/(Benefit from) income taxes | 257 | 101 | 218 | (58) | ||||||||||||
| Effective tax rate | 14.9 | % | 11.1 | % | 9.3 | % | (5.0) | % | ||||||||
| INCOME FROM CONTINUING OPERATIONS | $ | 1,465 | $ | 810 | $ | 2,127 | $ | 1,213 | ||||||||
| DISCONTINUED OPERATIONS | ||||||||||||||||
| Income/(Loss) from discontinued operations, net of taxes | (73) | 515 | (2) | 1,067 | ||||||||||||
| NET INCOME | $ | 1,392 | $ | 1,325 | $ | 2,125 | $ | 2,280 | ||||||||
| EARNINGS/(LOSS) PER SHARE OF COMMON STOCK | ||||||||||||||||
| Assuming Dilution | ||||||||||||||||
| Continuing Operations | $ | 1.61 | $ | 0.90 | $ | 2.34 | $ | 1.34 | ||||||||
| Discontinued Operations | $ | (0.08) | $ | 0.57 | $ | 0.00 | $ | 1.18 | ||||||||
| TOTAL | $ | 1.53 | $ | 1.47 | $ | 2.34 | $ | 2.52 | ||||||||
| Basic | ||||||||||||||||
| Continuing Operations | $ | 1.62 | $ | 0.91 | $ | 2.36 | $ | 1.36 | ||||||||
| Discontinued Operations | $ | (0.08) | $ | 0.57 | $ | 0.00 | $ | 1.19 | ||||||||
| TOTAL | $ | 1.54 | $ | 1.48 | $ | 2.36 | $ | 2.55 | ||||||||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's) | ||||||||||||||||
| Assuming Dilution | 910.7 | 904.2 | 910.0 | 903.0 | ||||||||||||
| Basic | 901.5 | 895.0 | 900.4 | 894.3 | ||||||||||||
| ____________________ | ||||||||||||||||
| * Recast to conform with 2022 presentation. | ||||||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) | ||||||
| At | At | |||||
| June 30, | December 31, | |||||
| (Dollars in Millions) | 2022 | 2021 | ||||
| ASSETS: | ||||||
| Current Assets: | ||||||
| Cash and cash equivalents | $ | 7,034 | $ | 6,650 | ||
| Restricted cash | 220 | 307 | ||||
| Marketable securities | 524 | 600 | ||||
| Notes and accounts receivable - trade, net | 5,867 | 6,754 | ||||
| Short-term financing receivables, net | 7,233 | 8,014 | ||||
| Other accounts receivable, net | 909 | 1,002 | ||||
| Inventories | 1,684 | 1,649 | ||||
| Deferred costs | 1,010 | 1,097 | ||||
| Prepaid expenses and other current assets | 3,414 | 3,466 | ||||
| Total Current Assets | 27,896 | 29,539 | ||||
| Property, plant and equipment, net | 5,275 | 5,694 | ||||
| Operating right-of-use assets, net | 2,848 | 3,222 | ||||
| Long-term financing receivables, net | 5,316 | 5,425 | ||||
| Prepaid pension assets | 9,930 | 9,850 | ||||
| Deferred costs | 865 | 924 | ||||
| Deferred taxes | 7,073 | 7,370 | ||||
| Goodwill | 55,039 | 55,643 | ||||
| Intangibles, net | 11,571 | 12,511 | ||||
| Investments and sundry assets | 1,689 | 1,823 | ||||
| Total Assets | $ | 127,503 | $ | 132,001 | ||
| LIABILITIES: | ||||||
| Current Liabilities: | ||||||
| Taxes | $ | 1,742 | $ | 2,289 | ||
| Short-term debt | 5,981 | 6,787 | ||||
| Accounts payable | 3,707 | 3,955 | ||||
| Deferred income | 12,522 | 12,518 | ||||
| Operating lease liabilities | 884 | 974 | ||||
| Other liabilities | 7,008 | 7,097 | ||||
| Total Current Liabilities | 31,844 | 33,619 | ||||
| Long-term debt | 44,328 | 44,917 | ||||
| Retirement related obligations | 13,118 | 14,435 | ||||
| Deferred income | 3,069 | 3,577 | ||||
| Operating lease liabilities | 2,182 | 2,462 | ||||
| Other liabilities | 13,486 | 13,996 | ||||
| Total Liabilities | 108,026 | 113,005 | ||||
| EQUITY: | ||||||
| IBM Stockholders' Equity: | ||||||
| Common stock | 57,802 | 57,319 | ||||
| Retained earnings | 153,298 | 154,209 | ||||
| Treasury stock — at cost | (169,522) | (169,392) | ||||
| Accumulated other comprehensive income/(loss) | (22,169) | (23,234) | ||||
| Total IBM Stockholders' Equity | 19,409 | 18,901 | ||||
| Noncontrolling interests | 67 | 95 | ||||
| Total Equity | 19,476 | 18,996 | ||||
| Total Liabilities and Equity | $ | 127,503 | $ | 132,001 | ||
| INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited) | |||||||||||||||
| Trailing Twelve | |||||||||||||||
| Three Months Ended | Six Months Ended | Months Ended | |||||||||||||
| June 30, | June 30, | June 30, | |||||||||||||
| (Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | 2022 | ||||||||||
| Consolidated Net Cash from Operations per GAAP | $ | 1,321 | $ | 2,625 | $ | 4,569 | $ | 7,539 | $ | 9,826 | |||||
| Less: change in IBM Financing receivables | (1,264) | 900 | 367 | 3,763 | 511 | ||||||||||
| Capital Expenditures, net | (494) | (688) | (871) | (1,217) | (2,035) | ||||||||||
| Consolidated Free Cash Flow | 2,091 | 1,037 | 3,331 | 2,559 | 7,279 | ||||||||||
| Acquisitions | (260) | (1,747) | (958) | (2,866) | (1,385) | ||||||||||
| Divestitures | 1,207 | (10) | 1,268 | (25) | 1,408 | ||||||||||
| Dividends | (1,488) | (1,467) | (2,963) | (2,924) | (5,907) | ||||||||||
| Non-Financing Debt | (2,934) | (586) | 1,740 | (2,331) | 2,880 | ||||||||||
| Other (includes IBM Financing net receivables and debt) | (1,607) | (335) | (2,197) | (522) | (4,661) | ||||||||||
| Change in Cash, Cash Equivalents, Restricted Cash and Short-term Marketable Securities* |
$ | (2,991) | $ | (3,108) | $ | 221 | $ | (6,110) | $ | (387) | |||||
| ____________________ | |||||||||||||||
| * Cash flows are presented on a consolidated basis. | |||||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| (Dollars in Millions) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Net Income from Operations | $ | 1,392 | $ | 1,325 | $ | 2,125 | $ | 2,280 | ||||
| Depreciation/Amortization of Intangibles | 1,245 | 1,680 | 2,501 | 3,352 | ||||||||
| Stock-based Compensation | 254 | 243 | 488 | 457 | ||||||||
| Working Capital / Other | (307) | (1,524) | (912) | (2,313) | ||||||||
| IBM Financing A/R | (1,264) | 900 | 367 | 3,763 | ||||||||
| Net Cash Provided by Operating Activities | $ | 1,321 | $ | 2,625 | $ | 4,569 | $ | 7,539 | ||||
| Capital Expenditures, net of payments & proceeds | (494) | (688) | (871) | (1,217) | ||||||||
| Divestitures, net of cash transferred | 1,207 | (10) | 1,268 | (25) | ||||||||
| Acquisitions, net of cash acquired | (260) | (1,747) | (958) | (2,866) | ||||||||
| Marketable Securities / Other Investments, net | (281) | (227) | (625) | (562) | ||||||||
| Net Cash Provided by/(Used in) Investing Activities | $ | 172 | $ | (2,671) | $ | (1,186) | $ | (4,671) | ||||
| Debt, net of payments & proceeds | (2,514) | (1,500) | 434 | (5,799) | ||||||||
| Dividends | (1,488) | (1,467) | (2,963) | (2,924) | ||||||||
| Financing - Other | (195) | (163) | (290) | (190) | ||||||||
| Net Cash Provided by/(Used in) Financing Activities | $ | (4,197) | $ | (3,131) | $ | (2,819) | $ | (8,914) | ||||
| Effect of Exchange Rate changes on Cash | (262) | 69 | (267) | (65) | ||||||||
| Net Change in Cash, Cash Equivalents and Restricted Cash* | $ | (2,965) | $ | (3,108) | $ | 297 | $ | (6,110) | ||||
| ____________________ | ||||||||||||
| * Cash flows are presented on a consolidated basis. | ||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited) | |||||||||||||
| Three Months Ended June 30, 2022 | |||||||||||||
| (Dollars in Millions) | Software | Consulting | Infrastructure | Financing | |||||||||
| Revenue | $ | 6,166 | $ | 4,809 | $ | 4,235 | $ | 146 | |||||
| Pre-tax Income/(Loss) from Continuing Operations | $ | 1,375 | $ | 343 | $ | 757 | $ | 102 | |||||
| Pre-tax Margin | 22.3 | % | 7.1 | % | 17.9 | % | 69.7 | % | |||||
| Change YTY Revenue | 6.4 | % | 9.8 | % | 19.0 | % | (29.9) | % | |||||
| Change YTY Revenue - constant currency | 11.6 | % | 17.8 | % | 25.4 | % | (26.6) | % | |||||
| Three Months Ended June 30, 2021* | |||||||||||||
| (Dollars in Millions) | Software | Consulting | Infrastructure | Financing | |||||||||
| Revenue | $ | 5,795 | $ | 4,378 | $ | 3,560 | $ | 209 | |||||
| Pre-tax Income/(Loss) from Continuing Operations | $ | 1,059 | $ | 270 | $ | 489 | $ | 131 | |||||
| Pre-tax Margin | 18.3 | % | 6.2 | % | 13.7 | % | 63.0 | % | |||||
| ____________________ | |||||||||||||
| * Recast to conform with 2022 presentation. | |||||||||||||
| Six Months Ended June 30, 2022 | |||||||||||||
| (Dollars in Millions) | Software | Consulting | Infrastructure | Financing | |||||||||
| Revenue | $ | 11,938 | $ | 9,637 | $ | 7,453 | $ | 300 | |||||
| Pre-tax Income/(Loss) from Continuing Operations | $ | 2,509 | $ | 691 | $ | 956 | $ | 186 | |||||
| Pre-tax Margin | 21.0 | % | 7.2 | % | 12.8 | % | 62.0 | % | |||||
| Change YTY Revenue | 9.2 | % | 11.5 | % | 8.8 | % | (28.0) | % | |||||
| Change YTY Revenue - constant currency | 13.4 | % | 17.6 | % | 13.4 | % | (25.5) | % | |||||
| Six Months Ended June 30, 2021* | |||||||||||||
| (Dollars in Millions) | Software | Consulting | Infrastructure | Financing | |||||||||
| Revenue | $ | 10,933 | $ | 8,641 | $ | 6,853 | $ | 417 | |||||
| Pre-tax Income/(Loss) from Continuing Operations | $ | 1,717 | $ | 547 | $ | 780 | $ | 229 | |||||
| Pre-tax Margin | 15.7 | % | 6.3 | % | 11.4 | % | 55.0 | % | |||||
| ____________________ | |||||||||||||
| * Recast to conform with 2022 presentation. | |||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) | |||||||||||||||||||
| Three Months Ended June 30, 2022 | |||||||||||||||||||
| Continuing Operations | |||||||||||||||||||
| Acquisition- | Retirement- | Tax | Kyndryl- | ||||||||||||||||
| Related | Related | Reform | Related | Operating | |||||||||||||||
| GAAP | Adjustments | Adjustments | Impacts | Impacts | (Non-GAAP) | ||||||||||||||
| Gross Profit | $ | 8,290 | $ | 180 | $ | — | $ | — | $ | — | $ | 8,470 | |||||||
| Gross Profit Margin | 53.4 | % | 1.2 | pts. | — | pts. | — | pts. | — | pts. | 54.5 | % | |||||||
| S,G&A | $ | 4,855 | $ | (279) | $ | — | $ | — | $ | (0) | $ | 4,576 | |||||||
| Other (Income) & Expense | (81) | (1) | (192) | — | (145) | (418) | |||||||||||||
| Total Expense & Other (Income) | 6,568 | (280) | (192) | — | (145) | 5,952 | |||||||||||||
| Pre-tax Income from Continuing | 1,722 | 460 | 192 | — | 145 | 2,518 | |||||||||||||
| Pre-tax Income Margin from | 11.1 | % | 3.0 | pts. | 1.2 | pts. | — | pts. | 0.9 | pts. | 16.2 | % | |||||||
| Provision for/(Benefit from) Income | $ | 257 | $ | 115 | $ | 46 | $ | (4) | $ | — | $ | 413 | |||||||
| Effective Tax Rate | 14.9 | % | 1.8 | pts. | 0.7 | pts. | (0.2) | pts. | (0.9) | pts. | 16.4 | % | |||||||
| Income from Continuing Operations | $ | 1,465 | $ | 345 | $ | 146 | $ | 4 | $ | 145 | $ | 2,105 | |||||||
| Income Margin from Continuing | 9.4 | % | 2.2 | pts. | 0.9 | pts. | 0.0 | pts. | 0.9 | pts. | 13.5 | % | |||||||
| Diluted Earnings/(Loss) Per Share: | $ | 1.61 | $ | 0.38 | $ | 0.16 | $ | 0.00 | $ | 0.16 | $ | 2.31 | |||||||
| Three Months Ended June 30, 2021 | |||||||||||||||||||
| Continuing Operations | |||||||||||||||||||
| Acquisition- | Retirement- | Tax | Kyndryl- | ||||||||||||||||
| Related | Related | Reform | Related | Operating | |||||||||||||||
| GAAP | Adjustments | Adjustments | Impacts | Impacts | (Non-GAAP) | ||||||||||||||
| Gross Profit | $ | 7,852 | $ | 179 | $ | — | $ | — | $ | — | $ | 8,031 | |||||||
| Gross Profit Margin | 55.2 | % | 1.3 | pts. | — | pts. | — | pts. | — | pts. | 56.5 | % | |||||||
| S,G&A | $ | 4,849 | $ | (294) | $ | — | $ | — | $ | — | $ | 4,555 | |||||||
| Other (Income) & Expense | 302 | (1) | (317) | — | — | (16) | |||||||||||||
| Total Expense & Other (Income) | 6,940 | (294) | (317) | — | — | 6,329 | |||||||||||||
| Pre-tax Income/(Loss) from Continuing | 912 | 474 | 317 | — | — | 1,702 | |||||||||||||
| Pre-tax Income Margin from | 6.4 | % | 3.3 | pts. | 2.2 | pts. | — | pts. | — | pts. | 12.0 | % | |||||||
| Provision for/(Benefit from) Income | $ | 101 | $ | 105 | $ | 53 | $ | (14) | $ | — | $ | 246 | |||||||
| Effective Tax Rate | 11.1 | % | 3.1 | pts. | 1.0 | pts. | (0.8) | pts. | — | pts. | 14.5 | % | |||||||
| Income from Continuing Operations | $ | 810 | $ | 368 | $ | 264 | $ | 14 | $ | — | $ | 1,456 | |||||||
| Income Margin from Continuing | 5.7 | % | 2.6 | pts. | 1.9 | pts. | 0.1 | pts. | — | pts. | 10.2 | % | |||||||
| Diluted Earnings/(Loss) Per Share: | $ | 0.90 | $ | 0.41 | $ | 0.29 | $ | 0.01 | $ | — | $ | 1.61 | |||||||
| ____________________ | |||||||||||||||||||
| (1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition | |||||||||||||||||||
| (2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/ | |||||||||||||||||||
| (3) Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap. | |||||||||||||||||||
| (4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax | |||||||||||||||||||
| INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) | |||||||||||||||||||
| Six Months Ended June 30, 2022 | |||||||||||||||||||
| Continuing Operations | |||||||||||||||||||
| Acquisition- | Retirement- | Tax | Kyndryl- | ||||||||||||||||
| Related | Related | Reform | Related | Operating | |||||||||||||||
| GAAP | Adjustments | Adjustments | Impacts | Impacts | (Non-GAAP) | ||||||||||||||
| Gross Profit | $ | 15,625 | $ | 361 | $ | — | $ | — | $ | — | $ | 15,986 | |||||||
| Gross Profit Margin | 52.6 | % | 1.2 | pts. | — | pts. | — | pts. | — | pts. | 53.8 | % | |||||||
| S,G&A | $ | 9,452 | $ | (565) | $ | — | $ | — | $ | (0) | $ | 8,887 | |||||||
| Other (Income) & Expense | 166 | (1) | (394) | — | (367) | (596) | |||||||||||||
| Total Expense & Other (Income) | 13,280 | (566) | (394) | — | (367) | 11,953 | |||||||||||||
| Pre-tax Income from Continuing | 2,345 | 928 | 394 | — | 367 | 4,033 | |||||||||||||
| Pre-tax Income Margin from | 7.9 | % | 3.1 | pts. | 1.3 | pts. | — | pts. | 1.2 | pts. | 13.6 | % | |||||||
| Provision for/(Benefit from) Income | $ | 218 | $ | 224 | $ | 104 | $ | 112 | $ | — | $ | 657 | |||||||
| Effective Tax Rate | 9.3 | % | 3.4 | pts. | 1.7 | pts. | 2.8 | pts. | (0.8) | pts. | 16.3 | % | |||||||
| Income from Continuing Operations | $ | 2,127 | $ | 704 | $ | 290 | $ | (112) | $ | 367 | $ | 3,376 | |||||||
| Income Margin from Continuing | 7.2 | % | 2.4 | pts. | 1.0 | pts. | (0.4) | pts. | 1.2 | pts. | 11.4 | % | |||||||
| Diluted Earnings/(Loss) Per Share: | $ | 2.34 | $ | 0.77 | $ | 0.32 | $ | (0.12) | $ | 0.40 | $ | 3.71 | |||||||
| Six Months Ended June 30, 2021 | |||||||||||||||||||
| Continuing Operations | |||||||||||||||||||
| Acquisition- | Retirement- | Tax | Kyndryl- | ||||||||||||||||
| Related | Related | Reform | Related | Operating | |||||||||||||||
| GAAP | Adjustments | Adjustments | Impacts | Impacts | (Non-GAAP) | ||||||||||||||
| Gross Profit | $ | 14,879 | $ | 353 | $ | — | $ | — | $ | — | $ | 15,232 | |||||||
| Gross Profit Margin | 54.3 | % | 1.3 | pts. | — | pts. | — | pts. | — | pts. | 55.6 | % | |||||||
| S,G&A | $ | 9,536 | $ | (582) | $ | — | $ | — | $ | — | $ | 8,954 | |||||||
| Other (Income) & Expense | 647 | (1) | (649) | — | — | (3) | |||||||||||||
| Total Expense & Other (Income) | 13,724 | (583) | (649) | — | — | 12,491 | |||||||||||||
| Pre-tax Income from Continuing | 1,155 | 936 | 649 | — | — | 2,741 | |||||||||||||
| Pre-tax Income Margin from | 4.2 | % | 3.4 | pts. | 2.4 | pts. | — | pts. | — | pts. | 10.0 | % | |||||||
| Provision for/(Benefit from) Income | $ | (58) | $ | 238 | $ | 86 | $ | 6 | $ | — | $ | 272 | |||||||
| Effective Tax Rate | (5.0) | % | 10.4 | pts. | 4.3 | pts. | 0.2 | pts. | — | pts. | 9.9 | % | |||||||
| Income from Continuing Operations | $ | 1,213 | $ | 699 | $ | 563 | $ | (6) | $ | — | $ | 2,469 | |||||||
| Income Margin from Continuing | 4.4 | % | 2.5 | pts. | 2.1 | pts. | (0.0) | pts. | — | pts. | 9.0 | % | |||||||
| Diluted Earnings/(Loss) Per Share: | $ | 1.34 | $ | 0.77 | $ | 0.62 | $ | (0.01) | $ | — | $ | 2.73 | |||||||
| ____________________ | |||||||||||||||||||
| (1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related | |||||||||||||||||||
| (2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan | |||||||||||||||||||
| (3) Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap. | |||||||||||||||||||
| (4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As | |||||||||||||||||||
View original content to get multimedia:https://www.prnewswire.com/news-releases/ibm-releases-second-quarter-results-301588504.html
SOURCE IBM
The best Python online courses make it simple and easy to learn, develop, and advance your programming skills.
Python is one of the most popular high-level, general-purpose programming languages. Named after the comedy troupe Monty Python, the language has a user-friendly syntax that makes it very appealing to beginners. It’s also very flexible and scalable, and has a very vibrant, global community of users.
Thanks to its rich set of tools and libraries you can use Python for just about anything -- from web development and data analysis to artificial intelligence and scientific computing.
According to the TIOBE Index, Python is currently the most popular programming language in the world. In fact, Python is used in some form or the other in virtually all major tech companies around the world, which makes it one of the top-most demanded skills.
If you want to work with Python scripts, you'll need a text editor suitable for coding and an Integrated Developed Environment (IDE) to run them.
We've judged these Python online courses across various parameters, like their pricing plans, the simplicity of their tutorials, the quality of learning support they offered, and what user level they were aimed at. We also evaluated the pace of the courses, the number of learning resources they had, and whether provided useful features like subtitles.
So whether you are new to Python or to programming itself, here are some of the best Python online courses to help you get to grips with the language.
We've also featured the best laptop for programmers.
Recommended cybersecurity course
Best Python online courses for 2022 in full
Skillshare offers several Python tutorials aimed at beginners, but very few are as comprehensive as "Programming in Python for Beginners". The Instructor has designed the course with the assumption that the students have absolutely no clue about programming. He’ll help you get started by setting up your Python development environment in Windows, before explaining all the basic constructs in the language and when to use them.
The course is made up of over 70 lessons for a total runtime of over 11 hours. The lessons will help you learn how the various arithmetic, logical and relational operators work and understand when to use lists, collections, tuples, dictionaries. The primer on functions is pretty usable as it shows you how to avoid common mistakes. The course also touches on some advanced syllabus like measuring the performance of your code to help write efficient code. There’s an exercise after every few lessons that’ll challenge you to put the newly acquired skills to solve a problem.
Note however that the Polish instructor has an accent, which didn’t bother us but your mileage may vary. Plus we liked the instructor’s engaging diction that made the course really interesting. He also actively engages with students in the discussions page on the course to clarify any doubts and share feedback on the exercises.
In terms of delivery, SkillShare has a rather vanilla player as compared to some of its peers. It does deliver you the ability to alter the play speed and add notes, but the lack of support for closed captions is disappointing. SkillShare offers a Free trial during which you can take any course in their library including this one.
Read our full SkillShare learning platform review.
Udemy offers a wide range of excellent courses, but their course, "The Python Mega Course: Build 10 Real World Applications", will be especially good for those who know some Python already. As its name suggests, the course teaches you how to build 10 practical apps using Python, from simple database query apps to web and desktop apps to data visualization dashboard, and more.
The instructor uses the Visual Studio Code IDE in the course that has over 250 videos divided into 33 sections. The first 8 sections cover the fundamentals of Python and another four cover advanced syllabus before you get to coding the 10 examples in the remainder of the course.
Many of the example apps are preceded by a section or two that teach the crucial elements in the example. For instance, before you build a desktop database app, you’ll learn how to use the Tkinter library to build GUIs and also how Python interacts with databases, particularly, SQLite, PostgreSQL and MySQL. The video lessons are supplemented by coding exercises and quizzes, and there’s also a Q&A section to post your questions to the instructor.
You can pay for the course once on Udemy to get lifetime access. The instructor regularly updates the course and once you’ve bought the course you’ll get these modifications for free. The learning experience is further enhanced by Udemy’s player, which is one of the best in the game. In addition to altering the playback speed, it’ll help you place bookmarks in the lectures.
To help you find areas of interest, it’ll also display popular locations bookmarked by other students. You also get closed captions in over a dozen languages and can even view an auto-scrolling transcript of the lessons. Furthermore, Udemy’s smartphone app has the option to get a lesson to the device for offline viewing.
Read our full Udemy learning platform review.
LinkedIn Learning offers a great range of professional development courses, and the course, "Advance your career with Python", is no different.
This course is designed for someone who has limited time and it’s ideal for you if you want a fast paced introduction to Python. The instructor uses the Anaconda distribution of Python and writes code in Jupyter Notebook. She doesn’t skip over any of the building blocks of the language and her lessons are nicely paced and well illustrated.
The good thing about the course is that instead of straightaway diving into coding a construct, which many fast-paced introductory courses do, the instructor begins each lesson by explaining the construct and its use. The course ends with a quick introduction to object-oriented programming.
LinkedIn Learning’s video player supports closed captions and you can also get a transcript for the course that you can use to jump into the lecture. The service also offers a free 1-month trial, which should be more than enough to take this course.
Read our full LinkedIn Learning review.
Coursera is another of our favorite online learning resources, and their "Principles of Computing" is a good course to expand your coding skills with Python. It's presented in two-parts and is offered by Rice University as part of the Fundamentals of Computing Specialization, which has a total of seven courses. The courses divide the lessons across several weeks, each of which has multiple video lectures, readings, practice exercises, homework quizzes, and assignments.
They are conducted by three Computer Science faculty members of Rice University and will upgrade your basic Python skills to help you think like a computer scientist. The courses introduce mathematical and computational principles, and how you can integrate them to solve complex problems, to enable you to write good code.
Coursera has a nice video player that offers closed captions and transcripts. You can also take notes at any point during the video lecture. Best of all you can get the video lectures in MP4 format as well as the subtitles and transcripts for offline viewing. You can audit the courses for free or earn a specialization certificate by subscribing to the service.
Read our full Coursera learning platform review.
edX provides an excellent range of free-to-access courses, and their "Analyzing Data with Python" course could be a great way for those with some Python coding skills to really break out into the wider field of data science.
This course equips you with all the skills you need to crunch raw data into meaningful information using Python, and will familiarize you with Python’s data analysis libraries including Pandas, NumPy, SciPy, and scikit-learn.
The self-paced course is divided into five modules with the sixth being the final assignment. Each module begins with a summary of the concepts that it’ll impart before it introduces the libraries and how they’re used to achieve the specified objective. There are quizzes and lab exercises to help you put the newly acquired knowledge to use.
The videos have closed captions as well as English transcripts that you can use to jump into the video. The course is conducted by IBM and requires you to put in 2-4 hours a week for five weeks. You can get a Tested certificate if you score over the specified minimum marks for the various exercises and quizzes.
Read our full edX learning platform review.
We've also featured the best Linux learning providers.
What are Python online courses?
How to choose the best Python online courses for you?
When deciding which of the best online Python course to use, first consider what level of competency you are currently at. If you've not learned Python and you've little experience with other programming languages then it would definitely be recommended to start with the beginner courses, as these will break you into the basics you'll need before you cover more advanced tools.
However, if you already have a decent amount of programming experience, especially with Python, then feel free to try your hand with the more advanced courses.
How we tested the best Python online courses
To test for the best online Python courses we searched for a range of popular options as well as took recommendations from people we know who are learning Python or who are already competent with it. Then we followed the tutorials to get an idea of how easy they were to follow, how easy it was to learn essential tools and processes, and additionally what sort of user level the courses were aimed at, such as beginner, medium, or advanced-level users.
See how we test, rate, and review products on TechRadar.
More online programming courses:
In this article, we discuss 10 high free cash flow dividend stocks. You can skip our detailed discussion of free cash flow stocks, and go directly to read 5 High Free Cash Flow Dividend Stocks.
With looming recession fears and a slumping economy, investors around the world are focusing on dividend stocks like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), as they provide regular passive income. For companies that exhibit strong financials, dividends are paid from free cash flow (FCF), which represents the cash left after the company has paid its expenditures and operating expenses. So, strong free cash flow determines the level of dividend sustainability, and companies with solid FCF generation are favored by investors.
As the US stock market recorded a terrible first half of the year, investors are paying attention to FCF now more than ever. According to Mary D’Onofrio, an investor at Bessemer Venture Partners, investors are selling their tech stocks in favor of the companies showing strong cash flows. This was also supported by EMJ Capital’s founder Eric Jackson, who asserted in his exact interview that companies that are becoming free cash flow positive are considered big opportunities in the current market environment.
According to a report by Bloomberg, the net assets of Pacer US Cash Cows 100 ETF, which tracks 100 companies based on free cash flow yield, reached $5.6 billion in May from $1.3 billion at the start of 2022. Due to inflation, the fund’s inflows grew every week this year and the net assets currently amounted to over $6.6 billion. The fund is down 0.76% in 2022 so far, compared with a 13.8% year-to-date loss of the S&P 500, as of the close of July 31. In view of this, we will focus on high free cash flow dividend stocks in this article.
Our Methodology:
The companies mentioned below have shown strong business fundamentals and free cash flow generation in their exact quarterly results. We also calculated the free cash flow yield of respective companies by dividing their FCF by market capitalization. The FCF used in this calculation was as of the end of December 2021. General, companies with free cash flow yields of above 6% are considered safe, which shows that they have enough cash to satisfy their dividend payments. The stocks are ranked according to their free cash flow yields.
10. Chevron Corporation (NYSE:CVX)
Free Cash Flow Yield: 6.5%
Dividend Yield as of August 1: 3.47%
Chevron Corporation (NYSE:CVX) is an American energy company that manufactures and sells gasoline, diesel, marine and aviation fuels, and fuel oil additives.
In Q2 2022, Chevron Corporation (NYSE:CVX) reported cash flow from operations of $13.8 billion and free cash flow of $10.6 billion. The company ended the first six months of the year with over $12 billion available in cash and cash equivalents, up from $5.6 billion at the end of December 2021. Chevron Corporation (NYSE:CVX) pays a quarterly dividend of $1.42 per share, with a dividend yield of 3.47%, as of August 1. The company maintains a 35-year track record of consistent dividend growth.
In July, HSBC upgraded Chevron Corporation (NYSE:CVX) to Buy with a $167 price target, highlighting the company’s buyback policy.
At the end of Q1 2022, 53 hedge funds tracked by Insider Monkey held stakes in Chevron Corporation (NYSE:CVX), the same as in the previous quarter. The collective value of these stakes is nearly $28 billion. Berkshire Hathaway was the company’s largest stakeholder in Q1, with over 159 million CVX shares.
In addition to The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), CVX is also one of the most prominent dividend stocks to consider.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm has to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
9. Target Corporation (NYSE:TGT)
Free Cash Flow Yield: 6.6%
Dividend Yield as of August 1: 2.46%
An American big-box store company, Target Corporation (NYSE:TGT) reported over $1.1 billion in cash and cash equivalents at the end of Q1 2022, with total assets amounting to nearly $18 billion. The company paid over $424 million in dividends during the quarter, up 32.4% from the same period last year. In addition to this, it also repurchased $10 million worth of shares during Q1, indicating strong financials. Target Corporation (NYSE:TGT) generated over $5 billion in free cash flow in FY21 and its free cash flow yield stands at 6.6%.
On June 20, Target Corporation (NYSE:TGT) announced a 20% hike in its quarterly dividend of $1.08 per share. The company maintains a 51-year track record of consistent dividend growth. Its payout ratio currently stands at 27.9%. As of August 1, the stock’s dividend yield came in at 2.46%.
In August, Wells Fargo upgraded Target Corporation (NYSE:TGT) to Overweight, with a $195 price target.
The number of hedge funds tracked by Insider Monkey owning stakes in Target Corporation (NYSE:TGT) stood at 50 in Q1 2022, up from 49 a quarter earlier. The collective value of stakes owned by hedge funds is nearly $3 billion. Arrowstreet Capital held the largest position in the company in Q1.
8. International Business Machines Corporation (NYSE:IBM)
Free Cash Flow Yield: 8.5%
Dividend Yield as of August 1: 5.05%
International Business Machines Corporation (NYSE:IBM) is an American multinational tech company that has operations in over 171 countries globally.
In Q2 2022, International Business Machines Corporation (NYSE:IBM) reported $1.3 billion in net cash from operating activities and generated $2.1 billion in free cash flow. Its free cash flow yield stood at 8.5%. The company ended the quarter with $7.8 billion available in cash and returned $1.5 billion to shareholders in dividends during the quarter.
International Business Machines Corporation (NYSE:IBM) has a solid dividend history, paying dividends to shareholders since 1916 while holding a 27-year streak of dividend growth. It currently pays a quarterly dividend of $1.65 per share, with a yield of 5.05%, as of the close of August 1.
In July, Morgan Stanley raised its price target on International Business Machines Corporation (NYSE:IBM) to $157 with an Overweight rating on the shares, expecting the company to perform well in the second half of the year.
At the end of Q1 2022, 43 hedge funds in Insider Monkey’s database presented a bullish stance on International Business Machines Corporation (NYSE:IBM). These hedge funds owned stakes worth over $1.16 billion in the company.
St. James Investment Company mentioned International Business Machines Corporation (NYSE:IBM) in its Q4 2021 investor letter. Here is what the firm had to say:
“IBM was not the first company to build computers. The distinction belongs to Sperry-Rand’s subsidiary UNIVAC, which introduced the first commercially successful computers in the early 1950s. In this era, IBM did possess the largest research and development department of the business machines industry and quickly caught up, introducing cost-competitive computers a few years after UNIVAC. By the late 1950s, IBM held the dominant market share in computers. IBM also touted a vastly superior sales organization, which used a sales tactic called “paper machines” (the equivalent of today’s “vaporware”). If a competitor’s product was selling well in a market segment that IBM had yet to penetrate, the company would announce a competing product and start taking orders for the “paper machine” long before it was available.
One cannot overstate how powerful IBM was in the computer industry in the 1950s and 1960s. Every competitor rightly worried that if their product worked too well for too long, it was only a matter of time before an army of IBM salesforce representatives mobilized. In their easily recognizable uniforms of starched white shirts, red ties and blue suits, IBM marketers marched on their customers and offered a more expensive, but much more defensible, choice. “Nobody gets fired for buying IBM” was a common phrase. Even competitors acknowledged that the company excelled at sales. As a UNIVAC executive once complained, ‘It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.’” (Click here to see the full text)
7. AbbVie Inc. (NYSE:ABBV)
Free Cash Flow Yield: 8.6%
Dividend Yield as of August 1: 3.93%
An American biopharmaceutical company, AbbVie Inc. (NYSE:ABBV) reported nearly $5 billion in operating cash flow and over $4.7 billion in free cash flow in Q1 2022. The company’s free cash flow yield currently stands at 8.6%. AbbVie Inc. (NYSE:ABBV) pays a quarterly dividend of $1.41 per share, with a yield of 3.93%. The company has been raising its dividends consistently for the past 50 years.
In July, JPMorgan lifted its price target on AbbVie Inc. (NYSE:ABBV) to $180 with an Overweight rating on the shares, calling the stock one of its favorite names in the pharma sector.
The number of hedge funds tracked by Insider Monkey owning stakes in AbbVie Inc. (NYSE:ABBV) fell to 76 in Q1 2022, from 82 in the previous quarter. The stakes owned by these hedge funds are collectively valued at over $3.6 billion. Among these hedge funds, Arrowstreet Capital was the company’s largest stakeholder in Q1, holding stakes worth over $754 million.
Carillon Tower Advisers mentioned AbbVie Inc. (NYSE:ABBV) in its Q1 2022 investor letter. Here is what the firm has to say:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. AbbVie (NYSE:ABBV) is a research-based biopharmaceutical company. Shares gained after the company reported earnings that missed revenue but beat earnings-per-share estimates. Discussion around the report was mixed but skewed positive.”
6. Exxon Mobil Corporation (NYSE:XOM)
Free Cash Flow Yield: 8.8%
Dividend Yield as of August 1: 3.63%
Exxon Mobil Corporation (NYSE:XOM) reported a strong balance sheet in Q2 2022, posting cash flow from operating activities of $20 billion. The energy company generated $16.9 billion in free cash flow, up from $10.8 billion recorded in the previous quarter. It distributed $7.6 billion to shareholders during the quarter, $3.7 billion of which represented dividend payments. Exxon Mobil Corporation (NYSE:XOM) has a free cash flow yield of 8.8%.
Exxon Mobil Corporation (NYSE:XOM) holds a 38-year track record of consistent dividend growth. It pays a quarterly dividend of $0.88 per share, with a dividend yield of 3.63%.
On August 1, BofA raised its price target on Exxon Mobil Corporation (NYSE:XOM) to $123, while maintaining a Buy rating on the shares.
Exxon Mobil Corporation (NYSE:XOM) was a popular stock among elite funds in Q1 2022, as 83 hedge funds in Insider Monkey’s database owned stakes in the company, up from 71 a quarter earlier. These stakes are collectively valued at over $8.55 billion.
Like The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG), analysts and investors are also paying attention to Exxon Mobil Corporation (NYSE:XOM).
Saturna Capital mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q4 2021 investor letter. Here is what the firm has to say:
“Few companies maintain their position at the top for more than a decade or two. One that did was Exxon, which appeared decennially from 1980 through 2010. In 2019 it was ranked 10th, but as of writing has dropped to 39th place.”
Click to continue memorizing and see 5 High Free Cash Flow Dividend Stocks.
Suggested articles:
Disclosure. None. 10 High Free Cash Flow Dividend Stocks is originally published on Insider Monkey.
International Business Machines IBM is scheduled to report second-quarter 2022 results on Jul 18 after market close. Being the world’s largest computer-services provider, it is worth taking a look at its fundamentals ahead of results.
IBM has gained 10.2% over the past three months outperforming the industry, which has declined 2.4%. The positive trend is expected to continue as IBM saw increasing earnings estimates for the yet-to-be-reported quarter right before the earnings announcement (see: all the Technology ETFs here).
Given this, ETFs having the highest allocation to this this tech giant will be in focus. These funds — First Trust NASDAQ Technology Dividend Index Fund TDIV, Invesco Dow Jones Industrial Average Dividend ETF DJD, WBI Power Factor High Dividend ETF WBIY, Amplify Transformational Data Sharing ETF BLOK, and SPDR NYSE Technology ETF XNTK — could be potential movers if IBM surprises the market.
Inside Our Methodology
IBM has a Zacks Rank #3 (Hold) and an Earnings ESP of +0.22%. According to our methodology, the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock has seen positive earnings estimate revision of a penny for the second quarter over the last seven days. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. Its earnings track is also impressive, with the average four-quarter positive earnings surprise being 2.02%. However, the Zacks Consensus Estimate indicates a substantial earnings decline of 1.3% from the year-ago quarter and a revenue decline of 19.3%. The stock has a VGM Score of B and belongs to a bottom-ranked Zacks industry (bottom 24%).
The Zacks Consensus Estimate for the average target price is $148.30, with 50% of the analysts having a Strong Buy or a Buy rating ahead of earnings.
ETFs in Focus
First Trust NASDAQ Technology Dividend Index Fund (TDIV)
First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. It charges 50 bps in annual fees and holds about 91 securities in its basket. Of these firms, IBM takes the top spot, making up 8.8% of the assets (read: Market-Beating Dividend ETFs of 1H).
First Trust NASDAQ Technology Dividend Index Fund has amassed $1.6 billion in its asset base while trading in a volume of around 160,000 shares per day.
Invesco Dow Jones Industrial Average Dividend ETF (DJD)
Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 28 stocks in its basket, with IBM occupying the top position accounting for 8.9%.
Invesco Dow Jones Industrial Average Dividend ETF has managed assets worth $222.9 million while trading in a volume of 58,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
WBI Power Factor High Dividend ETF (WBIY)
WBI Power Factor High Dividend ETF offers exposure to quality stocks that have the highest dividend yield with a deep value bias and multi-factor fundamental analysis. It follows the Solactive Power Factor High Dividend Index, holding 51 stocks in the basket. IBM takes the top position with a 6.4% share in the basket.
WBI Power Factor High Dividend ETF has amassed $62.4 million in its asset base and charges 70 bps in annual fees. It trades in a lower volume of 6,000 shares a day, on average.
Amplify Transformational Data Sharing ETF (BLOK)
Amplify Transformational Data Sharing ETF is actively managed, providing investors global exposure to a basket of the leading companies engaged in the development and utilization of blockchain technologies. It holds a basket of 49 stocks, with IBM taking the top spot at 5.5% of the portfolio. American firms dominate about 77% of the portfolio, followed by Asia Pacific (16.7%).
Amplify Transformational Data Sharing ETF has AUM of $521.8 million in its asset base and trades in an average daily volume of 367,000 shares. BLOK has an expense ratio of 0.71%.
SPDR NYSE Technology ETF (XNTK)
SPDR NYSE Technology ETF provides exposure to 35 leading U.S.-listed technology-related companies by tracking the NYSE Technology Index. IBM occupies the top spot with 5.1% of assets. Semiconductors take the largest share at 25.6%, while Internet & direct marketing retail, systems software and semiconductor equipment round off the next spots (read: Cathie Wood Sees a Fast Recovery in Tech ETFs: Is It Possible?).
SPDR NYSE Technology ETF has amassed $385.8 million and charges 35 bps in annual fees. It trades in an average daily volume of 16,000 shares and has a Zacks ETF Rank #2 (Buy).
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International Business Machines Corporation (IBM) : Free Stock Analysis Report
Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
WBI Power Factor High Dividend ETF (WBIY): ETF Research Reports
SPDR NYSE Technology ETF (XNTK): ETF Research Reports
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
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Zacks Investment Research
IBM Delivers Open Source Toolkit to Identify and Mitigate Bias in Advertising Technology
CANNES, France, June 20, 2022 /CNW/ -- Today, leading companies committed to improving fairness in marketing campaigns. The initiative, announced at the Cannes Lions International Festival of Creativity 2022, brought together agencies, brands, and other leaders to generate awareness and take action towards mitigating bias in advertising technology. Committing organizations include IBM (NYSE: IBM), Delta Air Lines, WPP, Mindshare, 4A's, IAB and the Ad Council.
The action is the most exact effort by IBM to drive education and awareness around the impact of bias in advertising technology. In 2021, the company launched a research initiative to explore the hypothesis that bias can exist in ad technology, which initial findings confirmed. The research also showed that mitigating bias in ad technology was possible using AI tools and resources in marketing processes. More industry participation and data collection are needed to better understand the potential impact of bias on these campaigns, but several industry leaders are demonstrating early activism by raising awareness and taking action via IBM's Advertising Fairness Pledge.
"While the risk of bias in advertising is well known, by making this commitment, these organizations are among the first in the industry to take action," said Bob Lord, IBM Senior Vice President of The Weather Company and Alliances. "Together, we are agreeing to educate ourselves and our companies and ask other industry leaders to join us in helping to mitigate bias in advertising."
Toward that effort, IBM also announced the release of its gratis Advertising Toolkit for AI Fairness 360, an open-source solution deploying 75 fairness metrics and 13 state-of-the-art algorithms to help identify and mitigate biases in discrete data sets. A playbook and sample code are also made available for ease of use. Organizations utilizing the toolkit may gain a better understanding of the presence and impact of bias on their ad campaigns, as well as the makeup of their audiences.
"Used correctly, data can help brands personalize consumer engagement and identify the most relevant touchpoints. However, we know that bias can exist in algorithms or technology, and that's why we're helping our clients to evaluate how and when to use data in a meaningful way that will benefit the customer experience," said Mark Read, CEO of WPP. "Through WPP's GroupM, we've developed the Data Ethics Compass to help clients navigate the challenges of using datasets, while IBM's new Advertising Toolkit for AI Fairness 360 will help us to better understand the potential impact of bias. Consumers rightly expect brands to use their information in a fair way and for the industry to tackle data bias collectively, which can ultimately result in increased engagement and commercial outcomes."
Bias is often unintentional, a result of human assumptions and judgments encoded into algorithms that can result in unfair targeting, exclusion of certain groups, and marketing campaign failures. Organizations taking the pledge can contribute data to ongoing studies that seek to better explain the impact of bias. According to Salesforce's 2022 State of the Connected Customer survey, nearly 62 percent of consumers surveyed reported they are concerned about bias in AI, up from just 54 percent two years prior, emphasizing the imperative for brands and agencies to better understand its impacts.
"As technology and data prevalence accelerates, the risk for bias in advertising compounds. It is our duty to address this head-on," said Adam Gerhart, Global CEO of Mindshare. "We believe the industry needs to take clear and intentional action, which is why we are committing to leverage the Advertising Toolkit for AI Fairness 360."
As the advertising industry continues to face issues related to privacy and transparency, many organizations believe that tackling bias in ad tech could be a next key area of focus for marketers. Nearly $1 trillion was spent on digital advertising globally in 2021, much of which flows through programmatic engines that segment and target specific audiences, sometimes missing large consumer groups in the process. With increasing consumer demand for transparency in how their data is used, marketers must look for new ways to remain effective. Tapping into alternative privacy-forward data sources, such as weather data, can be effective predictors of behavior that could also help rebuild trust with consumers.
"As a global brand, we know that every decision we make, whether it's about a supplier, an employee or an ad campaign, is a reflection of our values and the change we want to see in the world," said Emmakate Young, Delta's Managing Director of Brand Marketing. "We've long been focused on inclusive representation in our campaign creative, this effort allows us to go a step further to bring more inclusive representation to our campaign delivery."
To get the Advertising Toolkit for AI Fairness 360 and the associated playbook, to take the Advertising Fairness Pledge, and to learn more about how bias in advertising can negatively impact businesses and consumers, visit IBM's Bias in Advertising microsite.
To learn more about IBM Watson Advertising solutions and services, visit here.
Statements regarding IBM's future direction and intent are subject to change or withdrawal without notice and represent goals and objectives only.
About IBM
IBM is a leading global hybrid cloud and AI, and business services provider, helping clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly and efficiently. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM's legendary commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.
IBM Contacts:
Luca Sesti
luca.sesti@ibm.com
Clare Chachere
Clare.chachere@ibm.com
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SOURCE IBM
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IBM New Zealand's financial results for the year to the end of December 2021 reflected massive global changes at the company known as "Big Blue".
For the first time IBM's 2019 buyout, Red Hat has been consolidated into the local subsidiary's numbers while its local managed infrastructure service business, spun out in early September 2021 as part of New York listed Kyndryl, has been reported separately.
The end result for IBM NZ was a large increase in revenue from continuing operations, with sales surging to $172.4 million in 2021 from a restated $124.9 million in 2020.
Red Hat NZ, which was consolidated into IBM's numbers from 1 January 2021, also reported its local revenue for the year separately at $23.2 million, up from $14.7 million in 2020.
The business now known as Kyndryl earned $85.7 million in 2020 and $53.1 million in the ten months up to separation in 2021.
Breaking down IBM NZ's revenue from continuing operations, software sales rose from $57.7 million to $82.6 million, consulting from $19.4 million to $26.3 million and infrastructure from $35.3 million to $53.4 million.
Profit before tax from continuing operations grew significantly from $11.2 million to $38.2 million. However, after tax and the impact of an impairment booked on the discontinued Kyndryl business, IBM NZ reported a net profit for the year of $17.6 million, up from $9.6 million.
The accounts show IBM NZ performed a goodwill assessment and on sale recognised an impairment of $16 million on the Kyndryl business.
The business would no longer benefit from IBM’s brand name, it said, which could lead to potential loss of customers, a note in the financial statements said. In addition, customers would no longer benefit from the integrated solutions from both MIS and non-MIS goods or services and would need to procure these separately.
"Therefore, this may result in a loss in value in MIS business on a stand-alone basis as opposed to the business being managed together with other line of businesses under a single company in IBM," the statements noted.
"Deterioration in economic conditions over the past year in light of the global pandemic, changing client priorities and behaviors and increasing competition also resulted in the loss of value in MIS business."
Kyndryl NZ is now led a former IBMer Audrey Campbell-Frear who joined the company after a stint as general manager of innovation and new business at Olivado. She spent nearly four years at IBM between 2007 to 2011, as business development manager and client services executive.
Her CV also features over six years at network software developer Mavenir as country manager for New Zealand and the Pacific Islands and nearly 12 years at Spark as a senior manager.
Kyndryl NZ also wooed Yolanda Stead as head of alliances for A/NZ. She was focusing on deepening our relationships with key hyperscalers and other partners in the region, Kyndryl told Reseller News.
"Our footprint in government continues to be strong, having won a $21 million contract with the Victorian Department of Education late last year, as well as being certified by Australia’s Digital Transformation Agency (DTA) as a certified strategic service provider for our Government zCloud offering in January this year - the highest level of cloud services certification attainable," Kyndryl said in a statement.
On top of global alliance efforts, Kyndryl announced a multi-year agreement with CDC Data Centres in April to design and manage a customised environment within CDC’s facilities across A/NZ.
"This provides customers in both Australia and New Zealand with a resilient, managed infrastructure environment where they can harness advanced cloud technologies from the hyperscaler of their choosing," the company's statement said.
Work on establishing new local partnerships in New Zealand was also under way.
"A key focus has been developing our capabilities to ensure supply meets demand when it comes to the skills needed to deliver customer outcomes," Kyndryl told Reseller News.
"As part of this, our HR team has been working with operations and the learning organisation to ensure a significant proportion of our employee base in A/NZ develop contemporary skills around key technologies such as Microsoft, AWS and VMware that are needed to deliver higher-value work for customers."
IBM was asked for comment, but referred Reseller News to its global second quarter results announcement released earlier this week. The company reported revenue of $15.5 billion, up 9 per cent.
"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend."
Kyndryl is now a major customer of IBM.
For Immediate Release
Chicago, IL – July 25, 2022 – Zacks Equity Research shares Texas Pacific Land TPL as the Bull of the Day and International Business Machines IBM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Boeing Company BA, L3Harris Technologies LHX and Spire Global, Inc. SPIR.
Here is a synopsis of all five stocks:
Bull of the Day:
Texas Pacific Land is a Zacks Rank #1 (Strong Buy) that is landowners principally in the State of Texas. The Company generates revenue from pipeline, power line and utility easements, commercial leases, material sales and seismic and temporary permits related to land uses including midstream infrastructure projects and hydrocarbon processing facilities.
The stock took off in late 2020 and into 2021, moving from $400 to $1770. From there, the stock saw a slow descent, back under the $1000 level earlier this year.
But investors have been buying the stock since those bottoms in Q1. The stock is back at all time highs and should be watched for buying opportunities.
More About TPL
The company describes itself as a "Pure play in the Permian Basin." Texas Pacific Land was founded in 1888 and is headquartered in Dallas, Texas. It employs about 100 people and has a market cap of $13.5 billion.
TPL engages in the land and resource management, and water services and operations businesses.
The company's Land and Resource Management segment manages approximately 880,000 acres of land in 19 counties in the western part of Texas. It rents this land out to oil and gas producers that pay fees for use of that land.
Texas Pacific also has a Water Services and Operations segment that provides full-service water offerings.
The stock has a Zacks Style Score of "B" in Momentum and "C" in Growth. However, it has a "F" in Value, due to the high Forward PE of 28. While the PE is high, investors value the free cash flow more, which has been high due to higher energy prices.
Q1 Earnings
On May 4th, TPL reported an 8% EPS miss for Q1. While the company missed the estimates, the year over year numbers came in almost double from last year.
For earnings, the company saw $12.64 v the $6.45 last year. And for revenues, $147.M vs the $84.2M last year.
The company raised their dividend 9.1% and boosted their special dividend to $20 a share.
Here are some comments from management on the special dividend and the quarter:
"With tailwinds of favorable commodity prices, strong production, and a debt-free balance sheet, we're pleased to announce a $20 per share special dividend as our shareholders reap the windfall of supportive underlying fundamentals."
The company added that the dividend is on top of their $100 million share repurchase program and they will continue to return capital back to shareholders.
Estimates Rising
Analysts are getting excited about the upcoming quarters and raising estimates across all time frames.
Over the last month, estimates for the current quarter have gone from $15.10 to $15.84, a move of 5%. For the current year, we have seen a move of 3.5% higher, with estimates moving from $60.73 to $62.91.
Next year's estimates are also moving higher. Over the last 60 days, estimates have gone from $67.26 to $70.60, or 5%.
Strength in a Weak Market
TPL has not only been a great place to hide, it has been very rewarding. The stock is up almost 50% so far in 2022 and over 120% since the beginning over 2020.
In addition to the appreciation, investors are being rewarded with a small annual dividend and of course, the large special dividend. Investors should expect more special dividends in the future, due to the free cash flow that is being generated from high energy prices.
The Technical Take
The stock is trading at all-time highs so instead of chasing it, investors might want to be patient and look for pullbacks.
The 21-day moving average is at $1600, while the 50-day is at $1550. The 200-day MA is all the way down at $1330 and not likely to hit anytime soon.
Looking at the Fibonacci levels, the pullback earlier this year came down into the 61.8% retracement at $930 and held. Investors looking for upside targets could target the -23.6% level at $2075.
In Summary
When markets are weak, investors should look for relative strength. Not only is TPL relatively strong, but the stock has taken off to all-time highs. This is a very positive sign for investors and when market sentiment improves, the stock could really get going.
Investors should watch energy prices when owning a name like this. A large drop in oil and natural gas could destroy the narrative.
Bear of the Day:
International Business Machines is a Zacks Rank #5 (Strong Sell) provides advanced information technology solutions, computer systems, quantum computing and super computing solutions, enterprise software, storage systems and microelectronics.
"Big Blue" has struggled over the last decade, so they have tried to adjust and pivot to the cloud. Their acquisition of Red Hat helped this idea, but a exact earnings report has disappointed investors.
The stock is now trending lower and looks like it might challenge 2022 lows.
About the Company
IBM is headquartered in Armonk, New York. The company was incorporated in 1911 and employs over 280,000 people.
The company operates through four business segments: Software, Consulting, Infrastructure, and Financing.
IBM is valued at $114 billion and has a Forward PE of 13. The stock holds a Zacks Style Score of "C" in Value, "B" in Growth and "B" in Momentum. The stock pays a dividend of 5%.
Q2 Earnings
The company reported EPS last week, seeing Q2 at $2.31 versus the $2.29 expected. Revenues came in at $15.5B versus $15.1B. IBM affirmed FY22 at the high end of its mid-single digit model, but narrowed the FY22 FCF to $10B from $10-10.5B.
Margins were down year over year, from 55.2% to 53.4%. While software, consulting and infrastructure revenues were all higher year over year.
Here are some comments from CEO Arvind Krishna:
"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well."
Estimates
Analysts are already starting to drop estimates as a result of the earnings report.
After stabilizing over the last few months, estimates have fallen off a cliff over the last 7 days. For the current quarter, estimates have fallen from $2.57 to 2.07, or 20%.
Things look to Boost next quarter, but we see estimates tracking lower again for next year. Over the last 60 days, numbers have been lowered from $10.81 to $10.26, or 5%.
Technical Take
The stock was holding up well before earnings, as it was seeing support at the 50-day moving average. But IBM is now trading under all its moving averages after the earnings report, slicing right through the 200-day at $130.50.
The lows of the year are just under $120. These should be taken out if the momentum continues and the bears could possibly target the 2021 lows around $113.
Looking at Fibonacci levels, a 61.8% retracement drawn from May lows to June highs was holding at $133. However, this support was broken and bears should target the 161.8% extension at $113. This lines up with that 2021 low support.
In Summary
While big blue had some positive aspects to the quarter, investors were disappointed overall. The stock fell over 8% after earnings and looks like it could take out 2022 lows on any market weakness.
The stock pays a nice dividend, but with cash flow being taken down, investors might start to lose faith in that payout.
Additional content:
Will Abnormal Costs Hurt Boeing (BA) on Q2 Earnings?
Increased 737 delivery figures are expected to have boosted The Boeing Company's commercial business in the second quarter. However, second-quarter 2022 results, scheduled for release on Jul 27, are projected to reflect the impacts of abnormal costs related to the 777-9 program, on the bottom-line front.
Click here to know how the company's overall Q2 performance is expected to have been.
Solid 737 Max Deliveries to Boost Growth
Thanks to steadily recovering air traffic, improved delivery figures for Boeing's 737 jets, a trend we have been witnessing in the past couple of quarters, were observed in the second quarter of 2022 as well. Notably, the aerospace giant delivered 103 737 jets in the soon-to-be-reported quarter, reflecting quite a solid improvement of 106% from 50 units delivered in the year-ago quarter.
In fact, such significant delivery figures of 737 primarily drove a significant surge of 53.2% in the company's overall commercial deliveries. This, in turn, must have contributed to Boeing Commercial Airplane (BCA) business segment revenues in the soon-to-be-reported quarter.
The Boeing Company price-eps-surprise | The Boeing Company Quote
However, the aerospace giant was unable to deliver any of its 787 Dreamliner jets in the second quarter of 2022, owing to production quality issues related to the program. This might have partially impacted the top-line performance of the BCA segment.
Currently, the Zacks Consensus Estimate for Boeing's commercial business segment's revenues, pegged at $6,491 million, indicates a solid 7.9% improvement from the year-ago quarter's reported figure.
Earnings Expectation
On the cost front, delivery delays concerning the 787 performance issue are likely to have had an impact on BCA's operating profit, thereby hurting its quarterly earnings. Also, the production pause for the 777-9 program is projected to result in approximately $1.5 billion of abnormal costs beginning in the second quarter, which in turn must have weighed on this unit's bottom line.
However, improvements in commercial airplanes' financial performance due to increasing 737 MAX deliveries and consistent efforts by the BCA team to manage costs through business transformation activities must have contributed to this unit's bottom-line growth in the first quarter.
Further, we expect to witness a steady improvement in the company's expenses in relation to the storage of the 737 aircraft as jets stored so long in the inventory are gradually getting delivered.
So, the effect of the aforementioned factors on the overall second-quarter earnings performance of the BCA segment seems to have been mixed.
Currently, the Zacks Consensus Estimate for Boeing's commercial business segment's bottom line, pegged at a loss of $158 million, indicates an improvement from the year-ago quarter's reported figure of a loss of $472 million.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Boeing has an Earnings ESP of -62.40% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stocks to Consider
Here are a couple defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:
L3Harris Technologies: It is scheduled to release its second-quarter results on Jul 28. LHX holds a Zacks Rank #3 and has an Earnings ESP of +1.01%. You can see the complete list of today's Zacks #1 Rank stocks here.
LHX delivered a four-quarter average earnings surprise of 2.32%. The Zacks Consensus Estimate for L3Harris' second-quarter earnings, pegged at $3.16, has moved up 0.3% over the past seven days.
Spire Global, Inc. has an Earnings ESP of +9.43% and a Zacks Rank #3.
Spire delivered an earnings surprise of 7.7% in the last reported quarter. The Zacks Consensus Estimate for Spire's second-quarter sales is pegged at $18.93 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Zacks Investment Research
Growth Across Key Segments Led by Hybrid Cloud Adoption; Solid Cash and Profit Generation
ARMONK, N.Y., July 18, 2022 /PRNewswire/ -- IBM (NYSE: IBM) today announced second-quarter 2022 earnings results.
"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well," said Arvind Krishna, IBM chairman and chief executive officer. "With our first half results, we continue to expect full-year revenue growth at the high end of our mid-single digit model."
Second-Quarter Highlights
- Revenue
- Revenue of $15.5 billion, up 9 percent, up 16 percent at constant currency (about 5 points from sales to Kyndryl)
- Software revenue up 6 percent, up 12 percent at constant currency (about 7 points from sales to Kyndryl)
- Consulting revenue up 10 percent, up 18 percent at constant currency
- Infrastructure revenue up 19 percent, up 25 percent at constant currency (about 7 points from sales to Kyndryl)
- Hybrid cloud revenue, over the last 12 months, of $21.7 billion, up 16 percent, up 19 percent at constant currency - Cash Flow
- On a consolidated basis, year to date, net cash from operating activities of $4.6 billion; free cash flow of $3.3 billion
|
SECOND QUARTER 2022 INCOME STATEMENT SUMMARY |
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|
Pre-tax |
||||||||||||||||||
|
Gross |
Pre-tax |
Income |
Net |
Diluted |
||||||||||||||
|
Revenue |
Profit |
Income |
Margin |
Income |
EPS |
|||||||||||||
|
GAAP from |
$ |
15.5B |
$ |
8.3B |
$ |
1.7B |
11.1 |
% |
$ |
1.5B |
$ |
1.61 |
||||||
|
Year/Year |
9 |
%* |
6 |
% |
89 |
% |
4.7 |
Pts |
81 |
% |
79 |
% |
||||||
|
Operating |
$ |
8.5B |
$ |
2.5B |
16.2 |
% |
$ |
2.1B |
$ |
2.31 |
||||||||
|
Year/Year |
5 |
% |
48 |
% |
4.2 |
Pts |
45 |
% |
43 |
% |
||||||||
|
*16% at constant currency |
||||||||||||||||||
"We are a faster-growing, focused, disciplined company with sound business fundamentals," said James Kavanaugh, IBM senior vice president and chief financial officer. "Our recurring revenue stream and solid cash generation position us well to continue to invest in R&D, acquire new companies, and strengthen our talent in every part of the business, while also returning value to shareholders through our dividend."
Segment Results for Second Quarter
- Software (includes Hybrid Platform & Solutions, Transaction Processing)— revenues of $6.2 billion, up 6.4 percent, up 11.6 percent at constant currency (about 7 points from sales to Kyndryl):
- Hybrid Platform & Solutions up 4 percent, up 9 percent at constant currency (about 1.5 points from sales to Kyndryl):
-- Red Hat up 12 percent, up 17 percent at constant currency
-- Automation up 4 percent, up 8 percent at constant currency
-- Data & AI flat, up 4 percent at constant currency
-- Security flat, up 5 percent at constant currency
- Transaction Processing up 12 percent, up 19 percent at constant currency (about 22 points from sales to Kyndryl)
- Software segment hybrid cloud revenue up 14 percent, up 18 percent at constant currency - Consulting (includes Business Transformation, Technology Consulting and Application Operations)— revenues of $4.8 billion, up 9.8 percent, up 17.8 percent at constant currency:
- Business Transformation up 9 percent, up 16 percent at constant currency
- Technology Consulting up 14 percent, up 23 percent at constant currency
- Application Operations up 9 percent, up 17 percent at constant currency
- Consulting segment hybrid cloud revenue up 20 percent, up 29 percent at constant currency - Infrastructure (includes Hybrid Infrastructure, Infrastructure Support)— revenues of $4.2 billion, up 19.0 percent, up 25.4 percent at constant currency (about 7 points from sales to Kyndryl):
- Hybrid Infrastructure up 34 percent, up 41 percent at constant currency (about 7 points from sales to Kyndryl)
-- IBM z Systems up 69 percent, up 77 percent at constant currency
-- Distributed Infrastructure up 11 percent, up 17 percent at constant currency
- Infrastructure Support down 2 percent, up 5 percent at constant currency (about 8 points from sales to Kyndryl)
- Infrastructure segment hybrid cloud revenue up 24 percent, up 30 percent at constant currency - Financing (includes client and commercial financing)— revenues of $0.1 billion, down 29.9 percent, down 26.6 percent at constant currency
Cash Flow and Balance Sheet
On a consolidated basis, in the second quarter, the company generated net cash from operating activities of $1.3 billion or $2.6 billion excluding IBM Financing receivables. IBM's free cash flow was $2.1 billion. The company returned $1.5 billion to shareholders in dividends in the second quarter.
On a consolidated basis, for the first six months of the year, the company generated net cash from operating activities of $4.6 billion or $4.2 billion excluding IBM Financing receivables. IBM's free cash flow was $3.3 billion, which includes cash impacts from the company's structural actions initiated at the end of 2020.
IBM ended the second quarter with $7.8 billion of cash on hand (which includes marketable securities), up $0.2 billion from year-end 2021. Debt, including IBM Financing debt of $12.3 billion, totaled $50.3 billion, down $1.4 billion since the end of 2021.
Full-Year 2022 Expectations
- Revenue growth: The company continues to expect constant currency revenue growth at the high end of its mid-single digit model. The company also expects an additional 3.5 point contribution from incremental sales to Kyndryl. At mid-July 2022 foreign exchange rates, currency is expected to be about a six-point headwind.
- Free Cash Flow: The company now expects about $10 billion in consolidated free cash flow.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company's current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause genuine results to differ materially, including, but not limited to, the following: a downturn in economic environment and client spending budgets; a failure of the company's innovation initiatives; damage to the company's reputation; risks from investing in growth opportunities; failure of the company's intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; the company's ability to successfully manage acquisitions, alliances and dispositions, including integration challenges, failure to achieve objectives, the assumption of liabilities, and higher debt levels; fluctuations in financial results; impact of local legal, economic, political, health and other conditions; the company's failure to meet growth and productivity objectives; ineffective internal controls; the company's use of accounting estimates; impairment of the company's goodwill or amortizable intangible assets; the company's ability to attract and retain key employees and its reliance on critical skills; impacts of relationships with critical suppliers; product quality issues; impacts of business with government clients; reliance on third party distribution channels and ecosystems; cybersecurity and data privacy considerations; adverse effects related to climate change and environmental matters, tax matters; legal proceedings and investigatory risks; the company's pension plans; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; potential failure of the separation of Kyndryl Holdings, Inc. to qualify for tax-free treatment; risk factors related to IBM securities; and other risks, uncertainties and factors discussed in the company's Form 10-Qs, Form 10-K and in the company's other filings with the U.S. Securities and Exchange Commission or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statements.
Presentation of Information in this Press Release
On November 3, 2021, IBM completed the separation of Kyndryl. Unless otherwise specified, results are presented on a continuing operations basis. All references to revenue impacts from sales to Kyndryl are incremental sales post-separation.
In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles (GAAP), the company has also disclosed in this press release the following non-GAAP information, which management believes provides useful information to investors:
IBM results —
- adjusting for currency (i.e., at constant currency);
- presenting operating (non-GAAP) earnings per share amounts and related income statement items;
- consolidated free cash flow;
- consolidated cash from operating activities excluding IBM Financing receivables;
The rationale for management's use of these non-GAAP measures is included in Exhibit 99.2 in the Form 8‑K that includes this press release and is being submitted today to the SEC.
Conference Call and Webcast
IBM's regular quarterly earnings conference call is scheduled to begin at 5:00 p.m. EDT, today. The Webcast may be accessed via a link at https://www.ibm.com/investor/events/earnings-2q22. Presentation charts will be available shortly before the Webcast.
Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).
Contact: IBM
Sarah Meron, 347 891 1770
sarah.meron@ibm.com
Tim Davidson, 914 844 7847
tfdavids@us.ibm.com
|
INTERNATIONAL BUSINESS MACHINES CORPORATION COMPARATIVE FINANCIAL RESULTS (Unaudited; Dollars in millions except per share amounts) |
||||||||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
|
2022 |
2021* |
2022 |
2021* |
|||||||||||||
|
REVENUE |
||||||||||||||||
|
Software |
$ |
6,166 |
$ |
5,795 |
$ |
11,938 |
$ |
10,933 |
||||||||
|
Consulting |
4,809 |
4,378 |
9,637 |
8,641 |
||||||||||||
|
Infrastructure |
4,235 |
3,560 |
7,453 |
6,853 |
||||||||||||
|
Financing |
146 |
209 |
300 |
417 |
||||||||||||
|
Other |
180 |
277 |
404 |
561 |
||||||||||||
|
TOTAL REVENUE |
15,535 |
14,218 |
29,732 |
27,405 |
||||||||||||
|
GROSS PROFIT |
8,290 |
7,852 |
15,625 |
14,879 |
||||||||||||
|
GROSS PROFIT MARGIN |
||||||||||||||||
|
Software |
79.2 |
% |
79.7 |
% |
79.0 |
% |
78.8 |
% |
||||||||
|
Consulting |
24.2 |
% |
27.6 |
% |
24.3 |
% |
27.7 |
% |
||||||||
|
Infrastructure |
53.8 |
% |
57.1 |
% |
52.4 |
% |
56.7 |
% |
||||||||
|
Financing |
35.3 |
% |
29.9 |
% |
36.5 |
% |
32.7 |
% |
||||||||
|
TOTAL GROSS PROFIT MARGIN |
53.4 |
% |
55.2 |
% |
52.6 |
% |
54.3 |
% |
||||||||
|
EXPENSE AND OTHER INCOME |
||||||||||||||||
|
S,G&A |
4,855 |
4,849 |
9,452 |
9,536 |
||||||||||||
|
R,D&E |
1,673 |
1,641 |
3,352 |
3,257 |
||||||||||||
|
Intellectual property and custom development income |
(176) |
(133) |
(297) |
(278) |
||||||||||||
|
Other (income) and expense |
(81) |
302 |
166 |
647 |
||||||||||||
|
Interest expense |
297 |
281 |
607 |
561 |
||||||||||||
|
TOTAL EXPENSE AND OTHER INCOME |
6,568 |
6,940 |
13,280 |
13,724 |
||||||||||||
|
INCOME/(LOSS) FROM CONTINUING OPERATIONS |
||||||||||||||||
|
BEFORE INCOME TAXES |
1,722 |
912 |
2,345 |
1,155 |
||||||||||||
|
Pre-tax margin |
11.1 |
% |
6.4 |
% |
7.9 |
% |
4.2 |
% |
||||||||
|
Provision for/(Benefit from) income taxes |
257 |
101 |
218 |
(58) |
||||||||||||
|
Effective tax rate |
14.9 |
% |
11.1 |
% |
9.3 |
% |
(5.0) |
% |
||||||||
|
INCOME FROM CONTINUING OPERATIONS |
$ |
1,465 |
$ |
810 |
$ |
2,127 |
$ |
1,213 |
||||||||
|
DISCONTINUED OPERATIONS |
||||||||||||||||
|
Income/(Loss) from discontinued operations, net of taxes |
(73) |
515 |
(2) |
1,067 |
||||||||||||
|
NET INCOME |
$ |
1,392 |
$ |
1,325 |
$ |
2,125 |
$ |
2,280 |
||||||||
|
EARNINGS/(LOSS) PER SHARE OF COMMON STOCK |
||||||||||||||||
|
Assuming Dilution |
||||||||||||||||
|
Continuing Operations |
$ |
1.61 |
$ |
0.90 |
$ |
2.34 |
$ |
1.34 |
||||||||
|
Discontinued Operations |
$ |
(0.08) |
$ |
0.57 |
$ |
0.00 |
$ |
1.18 |
||||||||
|
TOTAL |
$ |
1.53 |
$ |
1.47 |
$ |
2.34 |
$ |
2.52 |
||||||||
|
Basic |
||||||||||||||||
|
Continuing Operations |
$ |
1.62 |
$ |
0.91 |
$ |
2.36 |
$ |
1.36 |
||||||||
|
Discontinued Operations |
$ |
(0.08) |
$ |
0.57 |
$ |
0.00 |
$ |
1.19 |
||||||||
|
TOTAL |
$ |
1.54 |
$ |
1.48 |
$ |
2.36 |
$ |
2.55 |
||||||||
|
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (M's) |
||||||||||||||||
|
Assuming Dilution |
910.7 |
904.2 |
910.0 |
903.0 |
||||||||||||
|
Basic |
901.5 |
895.0 |
900.4 |
894.3 |
||||||||||||
|
____________________ |
||||||||||||||||
|
* Recast to conform with 2022 presentation. |
||||||||||||||||
|
INTERNATIONAL BUSINESS MACHINES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) |
||||||
|
At |
At |
|||||
|
June 30, |
December 31, |
|||||
|
(Dollars in Millions) |
2022 |
2021 |
||||
|
ASSETS: |
||||||
|
Current Assets: |
||||||
|
Cash and cash equivalents |
$ |
7,034 |
$ |
6,650 |
||
|
Restricted cash |
220 |
307 |
||||
|
Marketable securities |
524 |
600 |
||||
|
Notes and accounts receivable - trade, net |
5,867 |
6,754 |
||||
|
Short-term financing receivables, net |
7,233 |
8,014 |
||||
|
Other accounts receivable, net |
909 |
1,002 |
||||
|
Inventories |
1,684 |
1,649 |
||||
|
Deferred costs |
1,010 |
1,097 |
||||
|
Prepaid expenses and other current assets |
3,414 |
3,466 |
||||
|
Total Current Assets |
27,896 |
29,539 |
||||
|
Property, plant and equipment, net |
5,275 |
5,694 |
||||
|
Operating right-of-use assets, net |
2,848 |
3,222 |
||||
|
Long-term financing receivables, net |
5,316 |
5,425 |
||||
|
Prepaid pension assets |
9,930 |
9,850 |
||||
|
Deferred costs |
865 |
924 |
||||
|
Deferred taxes |
7,073 |
7,370 |
||||
|
Goodwill |
55,039 |
55,643 |
||||
|
Intangibles, net |
11,571 |
12,511 |
||||
|
Investments and sundry assets |
1,689 |
1,823 |
||||
|
Total Assets |
$ |
127,503 |
$ |
132,001 |
||
|
LIABILITIES: |
||||||
|
Current Liabilities: |
||||||
|
Taxes |
$ |
1,742 |
$ |
2,289 |
||
|
Short-term debt |
5,981 |
6,787 |
||||
|
Accounts payable |
3,707 |
3,955 |
||||
|
Deferred income |
12,522 |
12,518 |
||||
|
Operating lease liabilities |
884 |
974 |
||||
|
Other liabilities |
7,008 |
7,097 |
||||
|
Total Current Liabilities |
31,844 |
33,619 |
||||
|
Long-term debt |
44,328 |
44,917 |
||||
|
Retirement related obligations |
13,118 |
14,435 |
||||
|
Deferred income |
3,069 |
3,577 |
||||
|
Operating lease liabilities |
2,182 |
2,462 |
||||
|
Other liabilities |
13,486 |
13,996 |
||||
|
Total Liabilities |
108,026 |
113,005 |
||||
|
EQUITY: |
||||||
|
IBM Stockholders' Equity: |
||||||
|
Common stock |
57,802 |
57,319 |
||||
|
Retained earnings |
153,298 |
154,209 |
||||
|
Treasury stock — at cost |
(169,522) |
(169,392) |
||||
|
Accumulated other comprehensive income/(loss) |
(22,169) |
(23,234) |
||||
|
Total IBM Stockholders' Equity |
19,409 |
18,901 |
||||
|
Noncontrolling interests |
67 |
95 |
||||
|
Total Equity |
19,476 |
18,996 |
||||
|
Total Liabilities and Equity |
$ |
127,503 |
$ |
132,001 |
||
|
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW ANALYSIS (Unaudited) |
|||||||||||||||
|
Trailing Twelve |
|||||||||||||||
|
Three Months Ended |
Six Months Ended |
Months Ended |
|||||||||||||
|
June 30, |
June 30, |
June 30, |
|||||||||||||
|
(Dollars in Millions) |
2022 |
2021 |
2022 |
2021 |
2022 |
||||||||||
|
Consolidated Net Cash from Operations per GAAP |
$ |
1,321 |
$ |
2,625 |
$ |
4,569 |
$ |
7,539 |
$ |
9,826 |
|||||
|
Less: change in IBM Financing receivables |
(1,264) |
900 |
367 |
3,763 |
511 |
||||||||||
|
Capital Expenditures, net |
(494) |
(688) |
(871) |
(1,217) |
(2,035) |
||||||||||
|
Consolidated Free Cash Flow |
2,091 |
1,037 |
3,331 |
2,559 |
7,279 |
||||||||||
|
Acquisitions |
(260) |
(1,747) |
(958) |
(2,866) |
(1,385) |
||||||||||
|
Divestitures |
1,207 |
(10) |
1,268 |
(25) |
1,408 |
||||||||||
|
Dividends |
(1,488) |
(1,467) |
(2,963) |
(2,924) |
(5,907) |
||||||||||
|
Non-Financing Debt |
(2,934) |
(586) |
1,740 |
(2,331) |
2,880 |
||||||||||
|
Other (includes IBM Financing net receivables and debt) |
(1,607) |
(335) |
(2,197) |
(522) |
(4,661) |
||||||||||
|
Change in Cash, Cash Equivalents, Restricted Cash and Short-term |
$ |
(2,991) |
$ |
(3,108) |
$ |
221 |
$ |
(6,110) |
$ |
(387) |
|||||
|
____________________ |
|||||||||||||||
|
* Cash flows are presented on a consolidated basis. |
|||||||||||||||
|
INTERNATIONAL BUSINESS MACHINES CORPORATION CASH FLOW (Unaudited) |
||||||||||||
|
Three Months Ended |
Six Months Ended |
|||||||||||
|
June 30, |
June 30, |
|||||||||||
|
(Dollars in Millions) |
2022 |
2021 |
2022 |
2021 |
||||||||
|
Net Income from Operations |
$ |
1,392 |
$ |
1,325 |
$ |
2,125 |
$ |
2,280 |
||||
|
Depreciation/Amortization of Intangibles |
1,245 |
1,680 |
2,501 |
3,352 |
||||||||
|
Stock-based Compensation |
254 |
243 |
488 |
457 |
||||||||
|
Working Capital / Other |
(307) |
(1,524) |
(912) |
(2,313) |
||||||||
|
IBM Financing A/R |
(1,264) |
900 |
367 |
3,763 |
||||||||
|
Net Cash Provided by Operating Activities |
$ |
1,321 |
$ |
2,625 |
$ |
4,569 |
$ |
7,539 |
||||
|
Capital Expenditures, net of payments & proceeds |
(494) |
(688) |
(871) |
(1,217) |
||||||||
|
Divestitures, net of cash transferred |
1,207 |
(10) |
1,268 |
(25) |
||||||||
|
Acquisitions, net of cash acquired |
(260) |
(1,747) |
(958) |
(2,866) |
||||||||
|
Marketable Securities / Other Investments, net |
(281) |
(227) |
(625) |
(562) |
||||||||
|
Net Cash Provided by/(Used in) Investing Activities |
$ |
172 |
$ |
(2,671) |
$ |
(1,186) |
$ |
(4,671) |
||||
|
Debt, net of payments & proceeds |
(2,514) |
(1,500) |
434 |
(5,799) |
||||||||
|
Dividends |
(1,488) |
(1,467) |
(2,963) |
(2,924) |
||||||||
|
Financing - Other |
(195) |
(163) |
(290) |
(190) |
||||||||
|
Net Cash Provided by/(Used in) Financing Activities |
$ |
(4,197) |
$ |
(3,131) |
$ |
(2,819) |
$ |
(8,914) |
||||
|
Effect of Exchange Rate changes on Cash |
(262) |
69 |
(267) |
(65) |
||||||||
|
Net Change in Cash, Cash Equivalents and Restricted Cash* |
$ |
(2,965) |
$ |
(3,108) |
$ |
297 |
$ |
(6,110) |
||||
|
____________________ |
||||||||||||
|
* Cash flows are presented on a consolidated basis. |
||||||||||||
|
INTERNATIONAL BUSINESS MACHINES CORPORATION SEGMENT DATA (Unaudited) |
|||||||||||||
|
Three Months Ended June 30, 2022 |
|||||||||||||
|
(Dollars in Millions) |
Software |
Consulting |
Infrastructure |
Financing |
|||||||||
|
Revenue |
$ |
6,166 |
$ |
4,809 |
$ |
4,235 |
$ |
146 |
|||||
|
Pre-tax Income/(Loss) from Continuing Operations |
$ |
1,375 |
$ |
343 |
$ |
757 |
$ |
102 |
|||||
|
Pre-tax Margin |
22.3 |
% |
7.1 |
% |
17.9 |
% |
69.7 |
% |
|||||
|
Change YTY Revenue |
6.4 |
% |
9.8 |
% |
19.0 |
% |
(29.9) |
% |
|||||
|
Change YTY Revenue - constant currency |
11.6 |
% |
17.8 |
% |
25.4 |
% |
(26.6) |
% |
|||||
|
Three Months Ended June 30, 2021* |
|||||||||||||
|
(Dollars in Millions) |
Software |
Consulting |
Infrastructure |
Financing |
|||||||||
|
Revenue |
$ |
5,795 |
$ |
4,378 |
$ |
3,560 |
$ |
209 |
|||||
|
Pre-tax Income/(Loss) from Continuing Operations |
$ |
1,059 |
$ |
270 |
$ |
489 |
$ |
131 |
|||||
|
Pre-tax Margin |
18.3 |
% |
6.2 |
% |
13.7 |
% |
63.0 |
% |
|||||
|
____________________ |
|||||||||||||
|
* Recast to conform with 2022 presentation. |
|||||||||||||
|
Six Months Ended June 30, 2022 |
|||||||||||||
|
(Dollars in Millions) |
Software |
Consulting |
Infrastructure |
Financing |
|||||||||
|
Revenue |
$ |
11,938 |
$ |
9,637 |
$ |
7,453 |
$ |
300 |
|||||
|
Pre-tax Income/(Loss) from Continuing Operations |
$ |
2,509 |
$ |
691 |
$ |
956 |
$ |
186 |
|||||
|
Pre-tax Margin |
21.0 |
% |
7.2 |
% |
12.8 |
% |
62.0 |
% |
|||||
|
Change YTY Revenue |
9.2 |
% |
11.5 |
% |
8.8 |
% |
(28.0) |
% |
|||||
|
Change YTY Revenue - constant currency |
13.4 |
% |
17.6 |
% |
13.4 |
% |
(25.5) |
% |
|||||
|
Six Months Ended June 30, 2021* |
|||||||||||||
|
(Dollars in Millions) |
Software |
Consulting |
Infrastructure |
Financing |
|||||||||
|
Revenue |
$ |
10,933 |
$ |
8,641 |
$ |
6,853 |
$ |
417 |
|||||
|
Pre-tax Income/(Loss) from Continuing Operations |
$ |
1,717 |
$ |
547 |
$ |
780 |
$ |
229 |
|||||
|
Pre-tax Margin |
15.7 |
% |
6.3 |
% |
11.4 |
% |
55.0 |
% |
|||||
|
____________________ |
|||||||||||||
|
* Recast to conform with 2022 presentation. |
|||||||||||||
|
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) |
|||||||||||||||||||
|
Three Months Ended June 30, 2022 |
|||||||||||||||||||
|
Continuing Operations |
|||||||||||||||||||
|
Acquisition- |
Retirement- |
Tax |
Kyndryl- |
||||||||||||||||
|
Related |
Related |
Reform |
Related |
Operating |
|||||||||||||||
|
GAAP |
Adjustments (1) |
Adjustments (2) |
Impacts |
Impacts (3) |
(Non-GAAP) |
||||||||||||||
|
Gross Profit |
$ |
8,290 |
$ |
180 |
$ |
— |
$ |
— |
$ |
— |
$ |
8,470 |
|||||||
|
Gross Profit Margin |
53.4 |
% |
1.2 |
pts. |
— |
pts. |
— |
pts. |
— |
pts. |
54.5 |
% |
|||||||
|
S,G&A |
$ |
4,855 |
$ |
(279) |
$ |
— |
$ |
— |
$ |
(0) |
$ |
4,576 |
|||||||
|
Other (Income) & Expense |
(81) |
(1) |
(192) |
— |
(145) |
(418) |
|||||||||||||
|
Total Expense & Other (Income) |
6,568 |
(280) |
(192) |
— |
(145) |
5,952 |
|||||||||||||
|
Pre-tax Income from Continuing |
1,722 |
460 |
192 |
— |
145 |
2,518 |
|||||||||||||
|
Pre-tax Income Margin from |
11.1 |
% |
3.0 |
pts. |
1.2 |
pts. |
— |
pts. |
0.9 |
pts. |
16.2 |
% |
|||||||
|
Provision for/(Benefit from) Income |
$ |
257 |
$ |
115 |
$ |
46 |
$ |
(4) |
$ |
— |
$ |
413 |
|||||||
|
Effective Tax Rate |
14.9 |
% |
1.8 |
pts. |
0.7 |
pts. |
(0.2) |
pts. |
(0.9) |
pts. |
16.4 |
% |
|||||||
|
Income from Continuing Operations |
$ |
1,465 |
$ |
345 |
$ |
146 |
$ |
4 |
$ |
145 |
$ |
2,105 |
|||||||
|
Income Margin from Continuing |
9.4 |
% |
2.2 |
pts. |
0.9 |
pts. |
0.0 |
pts. |
0.9 |
pts. |
13.5 |
% |
|||||||
|
Diluted Earnings/(Loss) Per Share: |
$ |
1.61 |
$ |
0.38 |
$ |
0.16 |
$ |
0.00 |
$ |
0.16 |
$ |
2.31 |
|||||||
|
Three Months Ended June 30, 2021 |
|||||||||||||||||||
|
Continuing Operations |
|||||||||||||||||||
|
Acquisition- |
Retirement- |
Tax |
Kyndryl- |
||||||||||||||||
|
Related |
Related |
Reform |
Related |
Operating |
|||||||||||||||
|
GAAP |
Adjustments (1) |
Adjustments (2) |
Impacts |
Impacts (3) |
(Non-GAAP) |
||||||||||||||
|
Gross Profit |
$ |
7,852 |
$ |
179 |
$ |
— |
$ |
— |
$ |
— |
$ |
8,031 |
|||||||
|
Gross Profit Margin |
55.2 |
% |
1.3 |
pts. |
— |
pts. |
— |
pts. |
— |
pts. |
56.5 |
% |
|||||||
|
S,G&A |
$ |
4,849 |
$ |
(294) |
$ |
— |
$ |
— |
$ |
— |
$ |
4,555 |
|||||||
|
Other (Income) & Expense |
302 |
(1) |
(317) |
— |
— |
(16) |
|||||||||||||
|
Total Expense & Other (Income) |
6,940 |
(294) |
(317) |
— |
— |
6,329 |
|||||||||||||
|
Pre-tax Income/(Loss) from Continuing |
912 |
474 |
317 |
— |
— |
1,702 |
|||||||||||||
|
Pre-tax Income Margin from |
6.4 |
% |
3.3 |
pts. |
2.2 |
pts. |
— |
pts. |
— |
pts. |
12.0 |
% |
|||||||
|
Provision for/(Benefit from) Income |
$ |
101 |
$ |
105 |
$ |
53 |
$ |
(14) |
$ |
— |
$ |
246 |
|||||||
|
Effective Tax Rate |
11.1 |
% |
3.1 |
pts. |
1.0 |
pts. |
(0.8) |
pts. |
— |
pts. |
14.5 |
% |
|||||||
|
Income from Continuing Operations |
$ |
810 |
$ |
368 |
$ |
264 |
$ |
14 |
$ |
— |
$ |
1,456 |
|||||||
|
Income Margin from Continuing |
5.7 |
% |
2.6 |
pts. |
1.9 |
pts. |
0.1 |
pts. |
— |
pts. |
10.2 |
% |
|||||||
|
Diluted Earnings/(Loss) Per Share: |
$ |
0.90 |
$ |
0.41 |
$ |
0.29 |
$ |
0.01 |
$ |
— |
$ |
1.61 |
|||||||
|
____________________ |
|||||||||||||||||||
|
(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related to acquisition |
|||||||||||||||||||
|
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan curtailments/ |
|||||||||||||||||||
|
(3) Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap. |
|||||||||||||||||||
|
(4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As Reported pre-tax |
|||||||||||||||||||
|
INTERNATIONAL BUSINESS MACHINES CORPORATION U.S. GAAP TO OPERATING (Non-GAAP) RESULTS RECONCILIATION (Unaudited; Dollars in millions except per share amounts) |
|||||||||||||||||||
|
Six Months Ended June 30, 2022 |
|||||||||||||||||||
|
Continuing Operations |
|||||||||||||||||||
|
Acquisition- |
Retirement- |
Tax |
Kyndryl- |
||||||||||||||||
|
Related |
Related |
Reform |
Related |
Operating |
|||||||||||||||
|
GAAP |
Adjustments (1) |
Adjustments (2) |
Impacts |
Impacts (3) |
(Non-GAAP) |
||||||||||||||
|
Gross Profit |
$ |
15,625 |
$ |
361 |
$ |
— |
$ |
— |
$ |
— |
$ |
15,986 |
|||||||
|
Gross Profit Margin |
52.6 |
% |
1.2 |
pts. |
— |
pts. |
— |
pts. |
— |
pts. |
53.8 |
% |
|||||||
|
S,G&A |
$ |
9,452 |
$ |
(565) |
$ |
— |
$ |
— |
$ |
(0) |
$ |
8,887 |
|||||||
|
Other (Income) & Expense |
166 |
(1) |
(394) |
— |
(367) |
(596) |
|||||||||||||
|
Total Expense & Other (Income) |
13,280 |
(566) |
(394) |
— |
(367) |
11,953 |
|||||||||||||
|
Pre-tax Income from Continuing |
2,345 |
928 |
394 |
— |
367 |
4,033 |
|||||||||||||
|
Pre-tax Income Margin from |
7.9 |
% |
3.1 |
pts. |
1.3 |
pts. |
— |
pts. |
1.2 |
pts. |
13.6 |
% |
|||||||
|
Provision for/(Benefit from) Income |
$ |
218 |
$ |
224 |
$ |
104 |
$ |
112 |
$ |
— |
$ |
657 |
|||||||
|
Effective Tax Rate |
9.3 |
% |
3.4 |
pts. |
1.7 |
pts. |
2.8 |
pts. |
(0.8) |
pts. |
16.3 |
% |
|||||||
|
Income from Continuing Operations |
$ |
2,127 |
$ |
704 |
$ |
290 |
$ |
(112) |
$ |
367 |
$ |
3,376 |
|||||||
|
Income Margin from Continuing |
7.2 |
% |
2.4 |
pts. |
1.0 |
pts. |
(0.4) |
pts. |
1.2 |
pts. |
11.4 |
% |
|||||||
|
Diluted Earnings/(Loss) Per Share: |
$ |
2.34 |
$ |
0.77 |
$ |
0.32 |
$ |
(0.12) |
$ |
0.40 |
$ |
3.71 |
|||||||
|
Six Months Ended June 30, 2021 |
|||||||||||||||||||
|
Continuing Operations |
|||||||||||||||||||
|
Acquisition- |
Retirement- |
Tax |
Kyndryl- |
||||||||||||||||
|
Related |
Related |
Reform |
Related |
Operating |
|||||||||||||||
|
GAAP |
Adjustments (1) |
Adjustments (2) |
Impacts |
Impacts (3) |
(Non-GAAP) |
||||||||||||||
|
Gross Profit |
$ |
14,879 |
$ |
353 |
$ |
— |
$ |
— |
$ |
— |
$ |
15,232 |
|||||||
|
Gross Profit Margin |
54.3 |
% |
1.3 |
pts. |
— |
pts. |
— |
pts. |
— |
pts. |
55.6 |
% |
|||||||
|
S,G&A |
$ |
9,536 |
$ |
(582) |
$ |
— |
$ |
— |
$ |
— |
$ |
8,954 |
|||||||
|
Other (Income) & Expense |
647 |
(1) |
(649) |
— |
— |
(3) |
|||||||||||||
|
Total Expense & Other (Income) |
13,724 |
(583) |
(649) |
— |
— |
12,491 |
|||||||||||||
|
Pre-tax Income from Continuing |
1,155 |
936 |
649 |
— |
— |
2,741 |
|||||||||||||
|
Pre-tax Income Margin from |
4.2 |
% |
3.4 |
pts. |
2.4 |
pts. |
— |
pts. |
— |
pts. |
10.0 |
% |
|||||||
|
Provision for/(Benefit from) Income |
$ |
(58) |
$ |
238 |
$ |
86 |
$ |
6 |
$ |
— |
$ |
272 |
|||||||
|
Effective Tax Rate |
(5.0) |
% |
10.4 |
pts. |
4.3 |
pts. |
0.2 |
pts. |
— |
pts. |
9.9 |
% |
|||||||
|
Income from Continuing Operations |
$ |
1,213 |
$ |
699 |
$ |
563 |
$ |
(6) |
$ |
— |
$ |
2,469 |
|||||||
|
Income Margin from Continuing |
4.4 |
% |
2.5 |
pts. |
2.1 |
pts. |
(0.0) |
pts. |
— |
pts. |
9.0 |
% |
|||||||
|
Diluted Earnings/(Loss) Per Share: |
$ |
1.34 |
$ |
0.77 |
$ |
0.62 |
$ |
(0.01) |
$ |
— |
$ |
2.73 |
|||||||
|
____________________ |
|||||||||||||||||||
|
(1) Includes amortization of purchased intangible assets, in process R&D, transaction costs, applicable restructuring and related expenses, tax charges related |
|||||||||||||||||||
|
(2) Includes amortization of prior service costs, interest cost, expected return on plan assets, amortized actuarial gains/losses, the impacts of any plan |
|||||||||||||||||||
|
(3) Primarily relates to the fair value changes in the retained Kyndryl common stock and the related cash-settled swap. |
|||||||||||||||||||
|
(4) Tax impact on operating (non-GAAP) pre-tax income from continuing operations is calculated under the same accounting principles applied to the As |
|||||||||||||||||||
View original content to get multimedia:https://www.prnewswire.com/news-releases/ibm-releases-second-quarter-results-301588504.html
SOURCE IBM
International Business Machines IBM is scheduled to report second-quarter 2022 results on Jul 18 after market close. Being the world’s largest computer-services provider, it is worth taking a look at its fundamentals ahead of results.
IBM has gained 10.2% over the past three months outperforming the industry, which has declined 2.4%. The positive trend is expected to continue as IBM saw increasing earnings estimates for the yet-to-be-reported quarter right before the earnings announcement (see: all the Technology ETFs here).
Given this, ETFs having the highest allocation to this this tech giant will be in focus. These funds — First Trust NASDAQ Technology Dividend Index Fund TDIV, Invesco Dow Jones Industrial Average Dividend ETF DJD, WBI Power Factor High Dividend ETF WBIY, Amplify Transformational Data Sharing ETF BLOK, and SPDR NYSE Technology ETF XNTK — could be potential movers if IBM surprises the market.
Inside Our Methodology
IBM has a Zacks Rank #3 (Hold) and an Earnings ESP of +0.22%. According to our methodology, the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock has seen positive earnings estimate revision of a penny for the second quarter over the last seven days. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. Its earnings track is also impressive, with the average four-quarter positive earnings surprise being 2.02%. However, the Zacks Consensus Estimate indicates a substantial earnings decline of 1.3% from the year-ago quarter and a revenue decline of 19.3%. The stock has a VGM Score of B and belongs to a bottom-ranked Zacks industry (bottom 24%).
The Zacks Consensus Estimate for the average target price is $148.30, with 50% of the analysts having a Strong Buy or a Buy rating ahead of earnings.
ETFs in Focus
First Trust NASDAQ Technology Dividend Index Fund (TDIV)
First Trust NASDAQ Technology Dividend Index Fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. It charges 50 bps in annual fees and holds about 91 securities in its basket. Of these firms, IBM takes the top spot, making up 8.8% of the assets (read: Market-Beating Dividend ETFs of 1H).
First Trust NASDAQ Technology Dividend Index Fund has amassed $1.6 billion in its asset base while trading in a volume of around 160,000 shares per day.
Invesco Dow Jones Industrial Average Dividend ETF (DJD)
Invesco Dow Jones Industrial Average Dividend ETF offers exposure to dividend-paying companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 28 stocks in its basket, with IBM occupying the top position accounting for 8.9%.
Invesco Dow Jones Industrial Average Dividend ETF has managed assets worth $222.9 million while trading in a volume of 58,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold).
WBI Power Factor High Dividend ETF (WBIY)
WBI Power Factor High Dividend ETF offers exposure to quality stocks that have the highest dividend yield with a deep value bias and multi-factor fundamental analysis. It follows the Solactive Power Factor High Dividend Index, holding 51 stocks in the basket. IBM takes the top position with a 6.4% share in the basket.
WBI Power Factor High Dividend ETF has amassed $62.4 million in its asset base and charges 70 bps in annual fees. It trades in a lower volume of 6,000 shares a day, on average.
Amplify Transformational Data Sharing ETF (BLOK)
Amplify Transformational Data Sharing ETF is actively managed, providing investors global exposure to a basket of the leading companies engaged in the development and utilization of blockchain technologies. It holds a basket of 49 stocks, with IBM taking the top spot at 5.5% of the portfolio. American firms dominate about 77% of the portfolio, followed by Asia Pacific (16.7%).
Amplify Transformational Data Sharing ETF has AUM of $521.8 million in its asset base and trades in an average daily volume of 367,000 shares. BLOK has an expense ratio of 0.71%.
SPDR NYSE Technology ETF (XNTK)
SPDR NYSE Technology ETF provides exposure to 35 leading U.S.-listed technology-related companies by tracking the NYSE Technology Index. IBM occupies the top spot with 5.1% of assets. Semiconductors take the largest share at 25.6%, while Internet & direct marketing retail, systems software and semiconductor equipment round off the next spots (read: Cathie Wood Sees a Fast Recovery in Tech ETFs: Is It Possible?).
SPDR NYSE Technology ETF has amassed $385.8 million and charges 35 bps in annual fees. It trades in an average daily volume of 16,000 shares and has a Zacks ETF Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can get 7 Best Stocks for the Next 30 Days. Click to get this free report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
WBI Power Factor High Dividend ETF (WBIY): ETF Research Reports
SPDR NYSE Technology ETF (XNTK): ETF Research Reports
Amplify Transformational Data Sharing ETF (BLOK): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research
For Immediate Release
Chicago, IL – July 25, 2022 – Zacks Equity Research shares Texas Pacific Land TPL as the Bull of the Day and International Business Machines IBM as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Boeing Company BA, L3Harris Technologies LHX and Spire Global, Inc. SPIR.
Here is a synopsis of all five stocks:
Bull of the Day:
Texas Pacific Land is a Zacks Rank #1 (Strong Buy) that is landowners principally in the State of Texas. The Company generates revenue from pipeline, power line and utility easements, commercial leases, material sales and seismic and temporary permits related to land uses including midstream infrastructure projects and hydrocarbon processing facilities.
The stock took off in late 2020 and into 2021, moving from $400 to $1770. From there, the stock saw a slow descent, back under the $1000 level earlier this year.
But investors have been buying the stock since those bottoms in Q1. The stock is back at all time highs and should be watched for buying opportunities.
More About TPL
The company describes itself as a "Pure play in the Permian Basin." Texas Pacific Land was founded in 1888 and is headquartered in Dallas, Texas. It employs about 100 people and has a market cap of $13.5 billion.
TPL engages in the land and resource management, and water services and operations businesses.
The company's Land and Resource Management segment manages approximately 880,000 acres of land in 19 counties in the western part of Texas. It rents this land out to oil and gas producers that pay fees for use of that land.
Texas Pacific also has a Water Services and Operations segment that provides full-service water offerings.
The stock has a Zacks Style Score of "B" in Momentum and "C" in Growth. However, it has a "F" in Value, due to the high Forward PE of 28. While the PE is high, investors value the free cash flow more, which has been high due to higher energy prices.
Q1 Earnings
On May 4th, TPL reported an 8% EPS miss for Q1. While the company missed the estimates, the year over year numbers came in almost double from last year.
For earnings, the company saw $12.64 v the $6.45 last year. And for revenues, $147.M vs the $84.2M last year.
The company raised their dividend 9.1% and boosted their special dividend to $20 a share.
Here are some comments from management on the special dividend and the quarter:
"With tailwinds of favorable commodity prices, strong production, and a debt-free balance sheet, we're pleased to announce a $20 per share special dividend as our shareholders reap the windfall of supportive underlying fundamentals."
The company added that the dividend is on top of their $100 million share repurchase program and they will continue to return capital back to shareholders.
Estimates Rising
Analysts are getting excited about the upcoming quarters and raising estimates across all time frames.
Over the last month, estimates for the current quarter have gone from $15.10 to $15.84, a move of 5%. For the current year, we have seen a move of 3.5% higher, with estimates moving from $60.73 to $62.91.
Next year's estimates are also moving higher. Over the last 60 days, estimates have gone from $67.26 to $70.60, or 5%.
Strength in a Weak Market
TPL has not only been a great place to hide, it has been very rewarding. The stock is up almost 50% so far in 2022 and over 120% since the beginning over 2020.
In addition to the appreciation, investors are being rewarded with a small annual dividend and of course, the large special dividend. Investors should expect more special dividends in the future, due to the free cash flow that is being generated from high energy prices.
The Technical Take
The stock is trading at all-time highs so instead of chasing it, investors might want to be patient and look for pullbacks.
The 21-day moving average is at $1600, while the 50-day is at $1550. The 200-day MA is all the way down at $1330 and not likely to hit anytime soon.
Looking at the Fibonacci levels, the pullback earlier this year came down into the 61.8% retracement at $930 and held. Investors looking for upside targets could target the -23.6% level at $2075.
In Summary
When markets are weak, investors should look for relative strength. Not only is TPL relatively strong, but the stock has taken off to all-time highs. This is a very positive sign for investors and when market sentiment improves, the stock could really get going.
Investors should watch energy prices when owning a name like this. A large drop in oil and natural gas could destroy the narrative.
Bear of the Day:
International Business Machines is a Zacks Rank #5 (Strong Sell) provides advanced information technology solutions, computer systems, quantum computing and super computing solutions, enterprise software, storage systems and microelectronics.
"Big Blue" has struggled over the last decade, so they have tried to adjust and pivot to the cloud. Their acquisition of Red Hat helped this idea, but a exact earnings report has disappointed investors.
The stock is now trending lower and looks like it might challenge 2022 lows.
About the Company
IBM is headquartered in Armonk, New York. The company was incorporated in 1911 and employs over 280,000 people.
The company operates through four business segments: Software, Consulting, Infrastructure, and Financing.
IBM is valued at $114 billion and has a Forward PE of 13. The stock holds a Zacks Style Score of "C" in Value, "B" in Growth and "B" in Momentum. The stock pays a dividend of 5%.
Q2 Earnings
The company reported EPS last week, seeing Q2 at $2.31 versus the $2.29 expected. Revenues came in at $15.5B versus $15.1B. IBM affirmed FY22 at the high end of its mid-single digit model, but narrowed the FY22 FCF to $10B from $10-10.5B.
Margins were down year over year, from 55.2% to 53.4%. While software, consulting and infrastructure revenues were all higher year over year.
Here are some comments from CEO Arvind Krishna:
"In the quarter we delivered good revenue performance with balanced growth across our geographies, driven by client demand for our hybrid cloud and AI offerings. The IBM team executed our strategy well."
Estimates
Analysts are already starting to drop estimates as a result of the earnings report.
After stabilizing over the last few months, estimates have fallen off a cliff over the last 7 days. For the current quarter, estimates have fallen from $2.57 to 2.07, or 20%.
Things look to Boost next quarter, but we see estimates tracking lower again for next year. Over the last 60 days, numbers have been lowered from $10.81 to $10.26, or 5%.
Technical Take
The stock was holding up well before earnings, as it was seeing support at the 50-day moving average. But IBM is now trading under all its moving averages after the earnings report, slicing right through the 200-day at $130.50.
The lows of the year are just under $120. These should be taken out if the momentum continues and the bears could possibly target the 2021 lows around $113.
Looking at Fibonacci levels, a 61.8% retracement drawn from May lows to June highs was holding at $133. However, this support was broken and bears should target the 161.8% extension at $113. This lines up with that 2021 low support.
In Summary
While big blue had some positive aspects to the quarter, investors were disappointed overall. The stock fell over 8% after earnings and looks like it could take out 2022 lows on any market weakness.
The stock pays a nice dividend, but with cash flow being taken down, investors might start to lose faith in that payout.
Additional content:
Will Abnormal Costs Hurt Boeing (BA) on Q2 Earnings?
Increased 737 delivery figures are expected to have boosted The Boeing Company's commercial business in the second quarter. However, second-quarter 2022 results, scheduled for release on Jul 27, are projected to reflect the impacts of abnormal costs related to the 777-9 program, on the bottom-line front.
Click here to know how the company's overall Q2 performance is expected to have been.
Solid 737 Max Deliveries to Boost Growth
Thanks to steadily recovering air traffic, improved delivery figures for Boeing's 737 jets, a trend we have been witnessing in the past couple of quarters, were observed in the second quarter of 2022 as well. Notably, the aerospace giant delivered 103 737 jets in the soon-to-be-reported quarter, reflecting quite a solid improvement of 106% from 50 units delivered in the year-ago quarter.
In fact, such significant delivery figures of 737 primarily drove a significant surge of 53.2% in the company's overall commercial deliveries. This, in turn, must have contributed to Boeing Commercial Airplane (BCA) business segment revenues in the soon-to-be-reported quarter.
The Boeing Company price-eps-surprise | The Boeing Company Quote
However, the aerospace giant was unable to deliver any of its 787 Dreamliner jets in the second quarter of 2022, owing to production quality issues related to the program. This might have partially impacted the top-line performance of the BCA segment.
Currently, the Zacks Consensus Estimate for Boeing's commercial business segment's revenues, pegged at $6,491 million, indicates a solid 7.9% improvement from the year-ago quarter's reported figure.
Earnings Expectation
On the cost front, delivery delays concerning the 787 performance issue are likely to have had an impact on BCA's operating profit, thereby hurting its quarterly earnings. Also, the production pause for the 777-9 program is projected to result in approximately $1.5 billion of abnormal costs beginning in the second quarter, which in turn must have weighed on this unit's bottom line.
However, improvements in commercial airplanes' financial performance due to increasing 737 MAX deliveries and consistent efforts by the BCA team to manage costs through business transformation activities must have contributed to this unit's bottom-line growth in the first quarter.
Further, we expect to witness a steady improvement in the company's expenses in relation to the storage of the 737 aircraft as jets stored so long in the inventory are gradually getting delivered.
So, the effect of the aforementioned factors on the overall second-quarter earnings performance of the BCA segment seems to have been mixed.
Currently, the Zacks Consensus Estimate for Boeing's commercial business segment's bottom line, pegged at a loss of $158 million, indicates an improvement from the year-ago quarter's reported figure of a loss of $472 million.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Boeing this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Boeing has an Earnings ESP of -62.40% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stocks to Consider
Here are a couple defense companies you may want to consider as these have the right combination of elements to post an earnings beat this season:
L3Harris Technologies: It is scheduled to release its second-quarter results on Jul 28. LHX holds a Zacks Rank #3 and has an Earnings ESP of +1.01%. You can see the complete list of today's Zacks #1 Rank stocks here.
LHX delivered a four-quarter average earnings surprise of 2.32%. The Zacks Consensus Estimate for L3Harris' second-quarter earnings, pegged at $3.16, has moved up 0.3% over the past seven days.
Spire Global, Inc. has an Earnings ESP of +9.43% and a Zacks Rank #3.
Spire delivered an earnings surprise of 7.7% in the last reported quarter. The Zacks Consensus Estimate for Spire's second-quarter sales is pegged at $18.93 billion.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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