International Business Machines Corp. (IBM), Nuance Communications Inc. (NUAN): A Closer Look at This Software Company’s Recent Results

The health care analytics market could be big enough to move the numbers for International Business Machines Corp. (NYSE:IBM). IBM has trailing revenue of $103 billion. Denise Amrich, for ZDNet Health, reported that a Markets and Markets projection estimates that health care analytics will be a $10.8 billion market in 2017.

Valuation

Nuance Communications Inc. (NASDAQ:NUAN)’s mention of new work from Apple may also mean that Apple Inc. (NASDAQ:AAPL) has new products on the way, but Apple isn’t priced like a growth stock. Apple Inc. (NASDAQ:AAPL) has a forward P/E of 10 and a forward yield of 2.8%. International Business Machines Corp. (NYSE:IBM) has a forward P/E of 11 and a forward yield of 1.9%, which makes Apple look like a better deal. Nuance has a forward P/E of 12 and offers no dividend, but this comparison actually makes Nuance look reasonably priced.

Nuance has a forward P/E that’s only a bit higher than these two large cap tech stocks, and one of these stocks is frequently considered undervalued. Nuance may have been expensive in the past, but that isn’t the case in 2013.

Takeaway

The Dragon software maker’s weak recent results could actually indicate an opportunity. Nuance Communications Inc. (NASDAQ:NUAN) may have given up immediate profits to gain steadier future income. Partnerships with International Business Machines Corp. (NYSE:IBM) and Apple Inc. (NASDAQ:AAPL) also show promise for Nuance. Carl Icahn’s decision to buy this stock may be the right move.

Eric Novinson has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Nuance Communications Inc. (NASDAQ:NUAN). The Motley Fool owns shares of Apple, Google Inc (NASDAQ:GOOG), International Business Machines Corp. (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), and Nuance Communications Inc. (NASDAQ:NUAN).

The article A Closer Look at This Software Company’s Recent Results originally appeared on Fool.com.

Eric is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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