After the closing bell on Tuesday, International Business Machines Corp. (IBM) released its fourth quarter financial results. Here’s what the results mean for mutual fund investors.
Inside IBM’s Results
Earnings
The company reported earnings of $5.48 billion, or $5.54 per share, down from $6.19 billion, or $5.77 per share, last year. Excluding special items, earnings were $5.81 per share – above analysts’ estimate of $5.41 per share.
Revenue
Revenue came in at $24.11 billion, down from $27.39 billion last year. Analysts expected to see revenue of $24.77 billion.
Stock More Expensive Than It Appears
At a glance, shares of IBM appear to be attractively valued. However, investors should be aware that the decline of EPS estimates will impact the stock’s valuation. Investors should also pay attention to the company’s decline in free cash flow and EPS.
If IBM is able to stabilize its earnings, the company does offer a fairly attractive dividend of 2.80% with a relatively low payout ratio of just 27%, which means there is room to raise its dividend in the years ahead.
Mutual Funds to Watch
Investors interested in IBM may be interested in the funds listed below. These funds currently have the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| VTSMX | Vanguard Total Stock Market | 1.68% |
| VFINX | Vanguard 500 Index | 1.08% |
| FUSEX | Fidelity Spartan® 500 Index | 0.42% |
The Bottom Line
The funds listed above allow investors to gain exposure to IBM while remaining diversified. Investors interested in IBM may also be interested in Microsoft (MSFT) and Oracle (ORCL).