Earnings season for the second quarter is upon us, and IT services giant International Business Machines (IBM) announced strong profits but decreasing revenue yesterday.
The mixed report included a 3% rise in operating earnings, up to $4.3 billion, which equalled $3.91 per share. This beat out the average analyst expectation of $3.77 per share.
Meanwhile the company's revenue fell by 3%, and net income dropped 17% - $3.2 billion, compared to $3.9 billion in the same quarter last year. This reflects a charge of roughly $1 billion IBM took in Q2 as a result of paring down it's workforce, suggesting even the industry titans haven't yet escaped the perils of a weak global economy.
So are there worthwhile investment opportunities in IT? We decided to search for bullish sentiments in IT service stocks among institutional investors, such as managers of hedge funds and mutual funds.
We screened for those stocks that experienced significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors expect these stocks to outperform in the future.
Only three companies remained on our list, and we also noted when they will each announce their latest earnings report. Increasing levels of institutional buying ahead of a stock's next big announcement, such as quarterly earnings, may be taken as a sign of even greater expectations of high performance in the near future.
Click on the image below to see analyst ratings over time. Average analyst ratings sourced from Zacks Investment Research.
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Do you agree with the bullish sentiments from institutional investors? Use this list as a starting point for your own analysis.
1. 21Vianet Group, Inc. (VNET, Earnings, Analysts, Financials): Provides carrier-neutral Internet data center services in China. Market cap at $775.03M, most recent closing price at $13.17.
Net institutional purchases in the current quarter at 4.5M shares, which represents about 14.51% of the company's float of 31.01M shares.The top holders of the stock are Cadian Capital Management, LLC (8.43%) and FMR, LLC (8.19%).The company reports earnings on 7/25/2013.
2. Virtusa Corp. (VRTU, Earnings, Analysts, Financials): Provides information technology (IT) consulting, technology implementation, and application outsourcing services in North America, Europe, the Middle East, India, and Sri Lanka. Market cap at $664.81M, most recent closing price at $26.50.
Net institutional purchases in the current quarter at 2.1M shares, which represents about 9.21% of the company's float of 22.81M shares.The top holders of the stock are FMR, LLC (13.13%) and Columbia Wanger Asset Management, L.P. (10.20%).The company reports earnings on 7/29/2013.
3. Radware Ltd. (RDWR, Earnings, Analysts, Financials): Provides application delivery solutions and network security solutions to banks, insurance companies, manufacturing and retail, government agencies, media companies, and service providers worldwide. Market cap at $664.33M, most recent closing price at $14.89.
Net institutional purchases in the current quarter at 2.3M shares, which represents about 5.33% of the company's float of 43.16M shares.The top holders of the stock are FIL Limited (5.27%) and Waddell & Reed Financial Inc. (4.01%).The company reports earnings on 8/12/2013.
(List compiled by Emily Smykal. Institutional data sourced from Fidelity. All other data sourced from Finviz)
Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad: Simply click on the links, and use Kapitall's tab navigation to browse through the data...
Analyze These Ideas: Getting StartedRead descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings21Vianet Group, Inc. (VNET, Chart, Download SEC Filings) Virtusa Corp. (VRTU, Chart, Download SEC Filings) Radware Ltd. (RDWR, Chart, Download SEC Filings)
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