Yahoo Finance Can Solid Consulting Revenues Propel IBM Earnings in Q1?
International Business Machines Corporation IBM is scheduled to report first-quarter 2024 results on Apr 24, after the closing bell. The company is expected to have registered higher revenues from the consulting segment, backed by rising demand for technology consulting services across various industries.
Factors at Play
The Consulting segment comprises Business Transformation, Technology Consulting and Application Operations. It provides consulting and application management services that offer value and innovation to clients by leveraging industry, technology and business strategy, and process know-how.
IBM Consulting is working to modernize contact center operations by harnessing generative AI. The solution also makes it easier to switch between chatbots and live agents. The detailed summary enables agents to speed up resolution and improve customer experience. Moreover, IBM Consulting has incorporated AWS generative AI services into IBM Consulting Cloud Accelerator to expedite the enterprise's cloud transformation process.
During the quarter, IBM collaborated with SAP to tap generative AI technology within the retail industry. The collaboration is likely to facilitate higher productivity and help accelerate business transformation in consumer-packaged goods and retail firms. Leveraging indigenous IBM technologies such as IBM Garage methodology, the company aims to help business enterprises undergo rapid digital transformation by embracing generative AI. The IBM Garage approach enables firms to manage strategic initiatives, quantify business outcomes and advance organizational and cultural change through bold IT transformations, re-imagined customer and employee experiences and automated business processes.
IBM is further likely to help the clients complement SAP solutions with IBM watsonx. The collaboration will help wholesale distributors and retailers improve product distribution by feeding external data such as weather, traffic and local events into the SAP Direct Distribution solution and apply AI to identify optimal store delivery routes to reduce costs. It will also help to efficiently manage store-level assortments by using generative AI based on the market dynamics of each store, prior sales patterns, anticipated demand and current product mix. These are likely to have driven incremental revenues in the Consulting segment in the first quarter.
During the March quarter, IBM also collaborated with Riyadh Air to enhance travel experiences, harnessing the power of IBM Consulting's expertise in AI, technology and operations. The state-of-the-art project aims to leverage cutting-edge digital technologies to incorporate easy-to-deploy and easy-to-access AI-powered systems and expand the scope of in-flight.
The collaboration aims to incorporate the IBM Garage model to help accelerate Riyadh Air’s digital transformation and innovation efforts. The model is designed to bring together cross-functional teams, leverage agile methodologies and use cutting-edge technologies to accelerate innovation and generate tangible business outcomes. These are likely to have generated incremental revenues in the Consulting segment.
Overall Expectations
The Zacks Consensus Estimate for Consulting revenues is pegged at $5,340 million, indicating growth from $4,962 million in the year-ago quarter. Our estimate for revenues from Consulting is pegged at $5,175 million, implying 4.3% growth year over year.
The Zacks Consensus Estimate for total revenues for the company stands at $14,577 million. It generated revenues of $14,252 million in the prior-year quarter. The consensus mark for earnings is currently pegged at $1.60 per share, indicating growth from $1.36 in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for IBM for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.39%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
International Business Machines Corporation Price and EPS Surprise
International Business Machines Corporation price-eps-surprise | International Business Machines Corporation Quote
Zacks Rank: IBM has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:
Qualcomm Incorporated QCOM is set to release quarterly numbers on May 1. It has an Earnings ESP of +2.78% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation SIMO is +5.96% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on May 2.
The Earnings ESP for Meta Platforms, Inc. META is +0.62% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 24.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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