February 29, 2024

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IBM Tops Q2 Earnings & Revenues: ETFs to Surge

After the closing bell on Jul 20, International Business Machines IBM reported robust second-quarter 2020 results. The company beat earnings and revenue estimates.

Earnings per share came in at $2.18, surpassing the Zacks Consensus Estimate by 4 cents, but declined from the year-ago earnings of $3.17. Revenues declined 5.4% year over year to $18.12 billion but edged past the consensus estimate of $17.71 billion (read: Worried About Big Tech Slump? Buy 6 Undervalued Tech ETFs).

Better-than-expected results were driven by a strong cloud computing business, which is getting a boost from the acceleration in digital shift due to the coronavirus crisis. Cloud revenues increased 30% to $6.3 billion in the quarter. However, the pandemic has hit hard IBM’s service business as many of its clients delayed purchases of information technology or software upgrades to focus on short-term stability and cash preservation to survive the pandemic.

Shares of IBM jumped more than 5.5% in after-market hours. The stock has a Zacks Rank #4 (Sell) and a Value Score of A. It belongs to a bottom-ranked Zacks industry (bottom 8%).

ETFs to Watch

Given this, ETFs with the highest allocation to this tech giant will be in focus. Investors should closely monitor the movement of these funds and grab the opportunity whenever it arises (see: all the Technology ETFs here).

First Trust NASDAQ Technology Dividend Index Fund TDIV

This fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed $1.2 billion in its asset base while trading in volume of around 158,000 shares per day. It charges 50 bps in annual fees and holds about 89 securities in its basket. Of these firms, IBM takes the fourth spot, making up roughly 7.3% of the assets.

Invesco Dow Jones Industrial Average Dividend ETF DJD

This ETF offers exposure to high-yielding companies included in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months. It holds 29 stocks in its basket, with IBM occupying the third position holding 5.9% allocation. DJD has been able to manage assets worth $109.2 million, while trading in volume of 60,000 shares a day on average. It charges 7 bps in annual fees and has a Zacks ETF Rank #3 (Hold) (read: Dow Jones ETFs to Soar Further After Best Quarter Since 1987?).

Invesco S&P Ultra Dividend Revenue ETF RDIV

This product invests in securities on the S&P 900 which excludes the top 5% of securities by dividend yield, top 5% of securities within each sector by dividend payout ratio, selects the top 60 securities by dividend yield and re-weighs those securities according to the revenue earned with a maximum 5% per company weighting. The fund holds 50 stocks in its basket, with IBM taking the seventh spot with 5% share. It has AUM of $637.1 million and average daily volume of 287,000 shares. The product charges 39 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.

First Trust Morningstar Dividend Leaders Index Fund FDL

With AUM of $1.3 billion, the fund offers exposure to stocks that have shown highest dividend consistency and dividend sustainability by tracking the Morningstar Dividend Leaders Index. It holds 101 stocks and IBM takes the seventh spot in the basket with 4.9% allocation. FDL charges 45 bps in annual fees from investors and trades in solid volume of more than 422,000 shares a day. It has a Zacks ETF Rank #3 with a Medium risk outlook.

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International Business Machines Corporation (IBM) : Free Stock Analysis Report
 
Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports
 
First Trust NASDAQ Technology Dividend ETF (TDIV): ETF Research Reports
 
Invesco SP Ultra Dividend Revenue ETF (RDIV): ETF Research Reports
 
First Trust Morningstar Dividend Leaders ETF (FDL): ETF Research Reports
 
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