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Why IBM Stock Popped Today

What happened

Shares of IBM (NYSE: IBM) rose 3.8% on Tuesday, following the release of the technology titan's first-quarter results.

So what

IBM's revenue rose 1% year over year to $17.7 billion, besting Wall Street's expectations for $17.4 billion. The gains were fueled by a 21% jump in IBM's total cloud revenue, to $6.5 billion.

"Strong performance this quarter in cloud, driven by increasing client adoption of our hybrid cloud platform, and growth in software and consulting enabled us to get off to a solid start for the year," CEO Arvind Krishna said in a press release.

Investors bid up IBM's stock price on Tuesday. Image source: Getty Images.

IBM's profits also exceeded analysts' expectations. Its adjusted earnings per share came in at $1.77, which was well above the consensus EPS estimate of $1.63.

Better still, IBM continues to crank out cash. It produced adjusted free cash flow of $2.2 billion in the first quarter, which allowed it to reward shareholders with $1.5 billion in dividends.

Now what

Stagnant revenue has long been a challenge for IBM. Investors were thus pleased that the company said it expects to grow its sales this year. Management also signaled that the company's cash flow generation will remain strong, with its guidance for adjusted free cash flow of $11 billion to $12 billion.

"While we have more work to do, we are confident we can achieve full-year revenue growth and meet our adjusted free cash flow target in 2021," Krishna said.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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