Since IBM (US:IBM) reported higher-than-expected earnings per share and roughly in-line sales for the second quarter on July 19, IBM stock has risen significantly. As well, the name now garners moderately strong Quality and Momentum scores on Fintel’s quant dashboard.

Also noteworthy is that options buyers appear to be somewhat bullish on the outlook of the shares, while the company’s cloud and artificial intelligence strategies seem to be working well.

Finally, a number of major institutional investors bought sizable amounts of IBM stock in the second quarter.

IBM stock is slated to go ex-dividend tomorrow, Aug. 9, with a current 4.5% yield.The company returned $1.5 billion to shareholders in dividends in Q2, meriting a Fintel Dividend Score of 65.92 on the 0 to 100 scale.

Q2 Results Spark Gains, Stoke High Quant Scores

IBM hit a home run on profitability, as its Q2 earnings per share came in at $2.18, excluding certain items, well above the $2.01 that analysts, on average, had anticipated, The company’s Q2 revenue was roughly in-line with the mean estimate. Moreover, its net income climbed an impressive 13% versus the same period a year earlier to $1.5 billion.

From the unveiling of the Q2 results to the market close on Aug. 7, IBM stock gained 8.0%, reaching its highest levels since January. The S&P 500 index in that time shows the mirror performance image, down 0.8%.

Moreover, Big Blue now has elevated Quality and Momentum scores of 71.8 and 73.65, respectively, on Fintel. IBM is in the top 15% of stocks in the Momentum metric and its Quality score is in the top 25% of names.

Bullish Options, Effective Strategies

The overall put/call ratio of IBM stock is a fairly bullish 0.62, Similarly, the put/call ratios for Aug. 2, Aug. 3, and Aug. 4 were all 0.62.

On Aug. 4, there were 240,577 open call options on the shares, the highest level since July 28.

Meanwhile, two data points divulged by IBM during its earnings call indicate that the company’s cloud and artificial intelligence businesses are clicking on all cylinders.

Specifically, Watson X, IBM’s ““new software platform for building enterprise AI models and applications,” was quickly adopted by over “150 enterprises, including Citi and NASA.”

Moreover, the sales generated by OpenShift, the company’s hybrid cloud platform, jumped 30% last quarter versus the same period a year earlier, bringing the system’s annual recurring revenue to $1.1 billion. Among the heavy hitters that utilized IBM’s hybrid cloud approach last quarter were liquor giant Diageo (US:DEO) and Air Canada (CA:AC).

Institutions Snap Up IBM Stock

On Aug. 4, Japanese investment bank Sumitomo reported that it had bought 21,899 shares of IBM last quarter, while Canada’s CIBC World Markets on the same day noted that it had acquired 75,892 shares of the name. Contrarious Investment Management opened a new position in IBM stock in Q2, acquiring 469,639 shares, the fund reported on Aug. 4.

Finally, Barclays, the large British bank, on Aug. 3 reported that it had bought 544,820 shares, and Shell Asset Management on July 28 disclosed that it had purchased 8,344 shares.

Skewed Dividend Recovery Metric

Dividend investors could be shocked looking only at IBM stock’s Dividend Recovery Days metric on Fintel’s scoreboard, which is an unappealing 16.4 days. But looking more closely at the history, we can see that the number is skewed from 2021.

 

When a dividend is announced, the share price of the stock generally increases and remains elevated until after the dividend is paid, after which it drops by the amount of the dividend. When harvesting dividends  — that is, buying a stock in the days before the dividend, capturing the dividend, and then selling  — it is crucial to know how many days it takes for the share price to recover after the dividend is paid, because the stock must be held for this duration in order for the trade to remain profitable.

In the case of IBM stock those recovery days seem to have, well… recovered by May 2022, and for the last four quarters, the average has been 2.5 days.

This article originally appeared on Fintel

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