Summary
IBM reported a solid Q3 hit by slight currency impacts.
The initial stock weakness is due to the market obsessing on the wrong metrics.
The tech company remains on track to start boosting EPS estimates in 2019.
The P/E at 10x plus a 4.5% dividend yield continues to warrant holding the stock.
The market correctly focuses on revenue metrics when reviewing stock valuations. The problem with International Business Machines (IBM) is that the market obsesses with revenue growth for a company slowly churning out of low-margin legacy businesses. The growth in strategic revenues and cash flows continues supporting our investment thesis of buying the stock on the weakness.
Image Source: IBM Q3'18 charts
