Moribund Big Blue
International Business Machines Corporation provides information technology (IT) products and services worldwide. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing.
[PostStockWidget stock_valuation="" pricetype="live" manual_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'IBM'" symbolprices="155" div_align="right"]
We originally bought IBM in June 2013 at $190.50. We held on to the shares on the basis that the earnings had not broken the long term uptrend. Today IBM announced another quarter of declining earnings, which makes for the second consecutive decline in EPS.
The Purple Chips rules are such that whenever there are 2 consecutive quarters of declining EPS, it is best to exit and stand aside.
The Purple Chips valuation range: Low: $0.00**, high: $180.00
EXITING IBM AT $152.75 (IBM-US, $152.00) FULL POSITION
TOTAL RETURN (inc dividends): -16.5%
PURPLE CHIPS TARGET: $180.00 POSITION SIZE: FULL (5.0%) P/E: 9.1X DIV: $4.40 (2.9%) MKT CAP: $150B Debt: $7B RETURN ON CAPITAL: 118.9% EARNINGS YIELD: 10.1% 5 YR EPS Growth rate*:9.6% P/E/G Ratio: 0.95 EPS: $16.35 2015 EST.: $16.51 2016 EST.: $17.83
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
