INTL BUSINESS MACHINES CORP (1IBM.MI) Stock Fundamental Analysis
Europe - Euronext Milan - BIT:1IBM - US4592001014 - Common Stock
251.85 EUR
-7.25 (-2.8%)
1IBM gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 76 industry peers in the IT Services industry. 1IBM has an excellent profitability rating, but there are concerns on its financial health. 1IBM is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
- 1IBM had positive earnings in the past year.
- 1IBM had a positive operating cash flow in the past year.
- In the past 5 years 1IBM has always been profitable.
- Each year in the past 5 years 1IBM had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 5.40%, 1IBM is in the better half of the industry, outperforming 63.16% of the companies in the same industry.
- With an excellent Return On Equity value of 28.34%, 1IBM belongs to the best of the industry, outperforming 89.47% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 8.07%, 1IBM is in line with its industry, outperforming 48.68% of the companies in the same industry.
- 1IBM had an Average Return On Invested Capital over the past 3 years of 7.07%. This is significantly below the industry average of 25.98%.
- The last Return On Invested Capital (8.07%) for 1IBM is above the 3 year average (7.07%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.4% | ||
| ROE | 28.34% | ||
| ROIC | 8.07% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.07%
ROIC(5y)6.14%
1.3 Margins
- 1IBM's Profit Margin of 12.09% is amongst the best of the industry. 1IBM outperforms 92.11% of its industry peers.
- 1IBM's Profit Margin has declined in the last couple of years.
- 1IBM has a better Operating Margin (16.06%) than 92.11% of its industry peers.
- 1IBM's Operating Margin has been stable in the last couple of years.
- 1IBM's Gross Margin of 57.81% is in line compared to the rest of the industry. 1IBM outperforms 44.74% of its industry peers.
- In the last couple of years the Gross Margin of 1IBM has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.06% | ||
| PM (TTM) | 12.09% | ||
| GM | 57.81% |
OM growth 3Y10.6%
OM growth 5Y0.28%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), 1IBM is destroying value.
- The number of shares outstanding for 1IBM has been increased compared to 1 year ago.
- 1IBM has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for 1IBM has been reduced compared to a year ago.
2.2 Solvency
- 1IBM has an Altman-Z score of 3.54. This indicates that 1IBM is financially healthy and has little risk of bankruptcy at the moment.
- 1IBM has a Altman-Z score of 3.54. This is in the better half of the industry: 1IBM outperforms 69.74% of its industry peers.
- 1IBM has a debt to FCF ratio of 5.27. This is a neutral value as 1IBM would need 5.27 years to pay back of all of its debts.
- 1IBM's Debt to FCF ratio of 5.27 is in line compared to the rest of the industry. 1IBM outperforms 47.37% of its industry peers.
- A Debt/Equity ratio of 1.98 is on the high side and indicates that 1IBM has dependencies on debt financing.
- 1IBM has a worse Debt to Equity ratio (1.98) than 78.95% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.54 |
ROIC/WACC0.93
WACC8.69%
2.3 Liquidity
- 1IBM has a Current Ratio of 0.93. This is a bad value and indicates that 1IBM is not financially healthy enough and could expect problems in meeting its short term obligations.
- 1IBM has a worse Current ratio (0.93) than 73.68% of its industry peers.
- A Quick Ratio of 0.89 indicates that 1IBM may have some problems paying its short term obligations.
- 1IBM's Quick ratio of 0.89 is on the low side compared to the rest of the industry. 1IBM is outperformed by 73.68% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 6.71% over the past year.
- The Earnings Per Share has been decreasing by -4.21% on average over the past years.
- 1IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 4.51%.
- Measured over the past years, 1IBM shows a small growth in Revenue. The Revenue has been growing by 1.69% on average per year.
EPS 1Y (TTM)6.71%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.22%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
3.2 Future
- The Earnings Per Share is expected to grow by 6.07% on average over the next years.
- 1IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.12% yearly.
EPS Next Y11%
EPS Next 2Y9.2%
EPS Next 3Y8.19%
EPS Next 5Y6.07%
Revenue Next Year6.82%
Revenue Next 2Y5.75%
Revenue Next 3Y5.24%
Revenue Next 5Y5.12%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 26.68, which means the current valuation is very expensive for 1IBM.
- The rest of the industry has a similar Price/Earnings ratio as 1IBM.
- 1IBM is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
- A Price/Forward Earnings ratio of 23.75 indicates a rather expensive valuation of 1IBM.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of 1IBM is on the same level as its industry peers.
- Compared to an average S&P500 Price/Forward Earnings ratio of 24.26, 1IBM is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.68 | ||
| Fwd PE | 23.75 |
4.2 Price Multiples
- 75.00% of the companies in the same industry are cheaper than 1IBM, based on the Enterprise Value to EBITDA ratio.
- 1IBM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.84 | ||
| EV/EBITDA | 21.27 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- 1IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.42
PEG (5Y)N/A
EPS Next 2Y9.2%
EPS Next 3Y8.19%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.26%, 1IBM has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 2.10, 1IBM pays a bit more dividend than its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.82, 1IBM pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.26% |
5.2 History
- The dividend of 1IBM has a limited annual growth rate of 0.81%.
Dividend Growth(5Y)0.81%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- 78.75% of the earnings are spent on dividend by 1IBM. This is not a sustainable payout ratio.
- 1IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP78.75%
EPS Next 2Y9.2%
EPS Next 3Y8.19%
INTL BUSINESS MACHINES CORP / 1IBM.MI FAQ
What is the ChartMill fundamental rating of INTL BUSINESS MACHINES CORP (1IBM.MI) stock?
ChartMill assigns a fundamental rating of 4 / 10 to 1IBM.MI.
What is the valuation status of INTL BUSINESS MACHINES CORP (1IBM.MI) stock?
ChartMill assigns a valuation rating of 2 / 10 to INTL BUSINESS MACHINES CORP (1IBM.MI). This can be considered as Overvalued.
What is the profitability of 1IBM stock?
INTL BUSINESS MACHINES CORP (1IBM.MI) has a profitability rating of 7 / 10.
Can you provide the expected EPS growth for 1IBM stock?
The Earnings per Share (EPS) of INTL BUSINESS MACHINES CORP (1IBM.MI) is expected to grow by 11% in the next year.
Is the dividend of INTL BUSINESS MACHINES CORP sustainable?
The dividend rating of INTL BUSINESS MACHINES CORP (1IBM.MI) is 4 / 10 and the dividend payout ratio is 78.75%.