Why Dow stock IBM looks undervalued into earnings

IBM is set to report earnings next week, and one market watcher sees the stock as a value play at current levels.

The company is scheduled to announce quarterly results Thursday after the market closes, and Mark Tepper of Strategic Wealth Partners likes the stock, off to a strong start to the year, ahead of its report. Here are his reasons why.

• The stock is undervalued relative to its peers, with a forward price-earnings ratio of 11.8, according to FactSet data.

• The company is strong in the cloud, mobile, security and analytics spaces.

• IBM is expanding its footprint in the growing blockchain market.

The stock fell nearly 8 percent last year and the company has seen 22 straight quarters of declining revenue. Still, after its last earnings report in October, the stock surged 9 percent.

Bottom line: Tepper sees IBM as a value at these levels, ahead of the company's earnings report next week.

Disclosure: Neither Mark Tepper nor his firm owns IBM.

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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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