Is IBM a Value Stock or a Value Trap?
IBM's (NYSE: IBM) stock price recently tumbled after the tech giant posted its fourth-quarter numbers. Its revenue dropped 6% year over year to $20.4 billion, missing estimates by $260 million and marking its fourth straight quarter of declining sales. Its adjusted earnings fell 56% to $2.07 per share, though it still beat expectations by $0.19.
IBM's results weren't surprising, since it's repeatedly struggled to offset the slow growth of its legacy IT services, on-site software, and hardware businesses with its newer cloud-based businesses. However, investors were also likely expecting better results after IBM acquired Red Hat in 2019 and brought in a new CEO last year.
IBM has already been a disappointing investment over the past 10 years. Its stock lost about a quarter of its value and reinvested dividends only gave investors a total return of 3% -- compared to a total return of nearly 270% for the S&P 500 over the same timeframe.
Source Fool.com
