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Should You Avoid IBM ETFs in Q2 Earnings?

International Business Machines IBM is scheduled to report second-quarter 2017 results on July 18 after market close. Being the world’s largest computer-services provider, it is worth taking a look at its fundamentals ahead of results.

IBM has bucked the trend of a broad technology surge this year, having shed 7.3% so far and lagging the Zacks categorized Computer – Integrated System industry. The downside might be limited as IBM could beat our earnings estimate though it has an unfavorable rank. Additionally, it saw positive earnings revisions, which are generally precursors to an earnings beat. Also, the company has attractive fundamentals.

Inside Our Methodology

The Q2 Zacks Consensus Estimate reflects substantial earnings decline of 7.5% and revenue decline of 3.8% from the year-ago quarter. This is rather disappointing for the company. Further, IBM has a Zacks Rank #4 (Sell) and an Earnings ESP of +2.56%.

According to our surprise prediction methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP has chances of an earnings beat. A Zacks Rank #4 or 5 (Sell rated) is best avoided going into the earnings announcement, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

However, the stock saw positive earnings estimate revision of a penny over the past 30 days for the second quarter. Analysts raising estimates right before...