In contrast with many innovative cloud players that have been posting high revenue growth over the last several years, the debt-loaded tech giant International Business Machines (NYSE: IBM) revealed unexciting second-quarter results on Monday with declining revenue and earnings per share. In addition, management still hasn't provided full-year guidance because of the coronavirus-induced uncertainties.
However, IBM's transition to the cloud is materializing, and the market values the company at a modest forward earnings multiple of 11.9. Given this contrasted situation, is IBM stock a buy?
Second-quarter revenue of $18.1 billion exceeded analysts' forecasts by $403 million, but it still dropped by 5.4% year over year. Granted, taking into account divestitures and currency impact, that revenue decline improved to 1.9%. That performance remains modest, though, as revenue was boosted by $867 million of extra contribution from IBM's $34 billion Red Hat acquisition in July 2019.
Source Fool.com