INTL BUSINESS MACHINES CORP (1IBM.MI) Stock Fundamental Analysis
BIT:1IBM - Euronext Milan - US4592001014 - Common Stock - Currency: EUR
We assign a fundamental rating of 4 out of 10 to 1IBM. 1IBM was compared to 70 industry peers in the IT Services industry. 1IBM has an excellent profitability rating, but there are concerns on its financial health. While showing a medium growth rate, 1IBM is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
1IBM had positive earnings in the past year.
In the past year 1IBM had a positive cash flow from operations.
In the past 5 years 1IBM has always been profitable.
1IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
1IBM has a Return On Assets of 4.39%. This is comparable to the rest of the industry: 1IBM outperforms 57.33% of its industry peers.
1IBM has a Return On Equity of 22.06%. This is amongst the best in the industry. 1IBM outperforms 88.00% of its industry peers.
1IBM has a Return On Invested Capital of 7.56%. This is comparable to the rest of the industry: 1IBM outperforms 54.67% of its industry peers.
1IBM had an Average Return On Invested Capital over the past 3 years of 7.26%. This is below the industry average of 11.01%.
The 3 year average ROIC (7.26%) for 1IBM is below the current ROIC(7.56%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.39% | ||
| ROE | 22.06% | ||
| ROIC | 7.56% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.26%
ROIC(5y)6.26%
1.3 Margins
Looking at the Profit Margin, with a value of 9.60%, 1IBM belongs to the top of the industry, outperforming 89.33% of the companies in the same industry.
1IBM's Profit Margin has declined in the last couple of years.
1IBM has a Operating Margin of 14.68%. This is amongst the best in the industry. 1IBM outperforms 92.00% of its industry peers.
1IBM's Operating Margin has improved in the last couple of years.
With a Gross Margin value of 56.65%, 1IBM perfoms like the industry average, outperforming 45.33% of the companies in the same industry.
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 | 14.68% | ||
| PM (TTM) | 9.6% | ||
| GM | 56.65% |
OM growth 3Y13.36%
OM growth 5Y1.77%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so 1IBM is destroying value.
Compared to 1 year ago, 1IBM has more shares outstanding
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
An Altman-Z score of 3.50 indicates that 1IBM is not in any danger for bankruptcy at the moment.
1IBM has a better Altman-Z score (3.50) than 78.67% of its industry peers.
1IBM has a debt to FCF ratio of 4.46. This is a neutral value as 1IBM would need 4.46 years to pay back of all of its debts.
1IBM has a Debt to FCF ratio (4.46) which is comparable to the rest of the industry.
1IBM has a Debt/Equity ratio of 1.83. This is a high value indicating a heavy dependency on external financing.
1IBM has a Debt to Equity ratio of 1.83. This is in the lower half of the industry: 1IBM underperforms 77.33% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.83 | ||
| Debt/FCF | 4.46 | ||
| Altman-Z | 3.5 |
ROIC/WACC0.73
WACC10.29%
2.3 Liquidity
1IBM has a Current Ratio of 1.04. This is a normal value and indicates that 1IBM is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.04, 1IBM is not doing good in the industry: 61.33% of the companies in the same industry are doing better.
A Quick Ratio of 1.00 indicates that 1IBM should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.00, 1IBM is not doing good in the industry: 60.00% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.49% over the past year.
Measured over the past years, 1IBM shows a decrease in Earnings Per Share. The EPS has been decreasing by -4.21% on average per year.
Looking at the last year, 1IBM shows a small growth in Revenue. The Revenue has grown by 1.44% in the last year.
The Revenue has been growing slightly by 1.69% on average over the past years.
EPS 1Y (TTM)7.49%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%1.29%
Revenue 1Y (TTM)1.44%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.99%
3.2 Future
The Earnings Per Share is expected to grow by 5.23% on average over the next years.
Based on estimates for the next years, 1IBM will show a small growth in Revenue. The Revenue will grow by 4.99% on average per year.
EPS Next Y4.84%
EPS Next 2Y5.64%
EPS Next 3Y6.18%
EPS Next 5Y5.23%
Revenue Next Year3.55%
Revenue Next 2Y4.18%
Revenue Next 3Y4.27%
Revenue Next 5Y4.99%
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
1IBM is valuated rather expensively with a Price/Earnings ratio of 24.21.
The rest of the industry has a similar Price/Earnings ratio as 1IBM.
Compared to an average S&P500 Price/Earnings ratio of 29.35, 1IBM is valued at the same level.
Based on the Price/Forward Earnings ratio of 23.08, the valuation of 1IBM can be described as rather expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as 1IBM.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.10, 1IBM is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.21 | ||
| Fwd PE | 23.08 |
4.2 Price Multiples
65.33% 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 ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.81 | ||
| EV/EBITDA | 19.56 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates 1IBM does not grow enough to justify the current Price/Earnings ratio.
1IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)5
PEG (5Y)N/A
EPS Next 2Y5.64%
EPS Next 3Y6.18%
5. Dividend
5.1 Amount
1IBM has a Yearly Dividend Yield of 2.69%.
Compared to an average industry Dividend Yield of 4.29, 1IBM pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.33, 1IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.69% |
5.2 History
The dividend of 1IBM has a limited annual growth rate of 0.83%.
Dividend Growth(5Y)0.83%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
102.04% 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.
DP102.04%
EPS Next 2Y5.64%
EPS Next 3Y6.18%
BIT:1IBM (3/5/2025, 7:00:00 PM)
230.2
-10.65 (-4.42%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners64.25%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap213.46B
Analysts73.08
Price Target244.67 (6.29%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.69% |
Yearly Dividend6.16
Dividend Growth(5Y)0.83%
DP102.04%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.93%
Min EPS beat(2)2.27%
Max EPS beat(2)3.59%
EPS beat(4)4
Avg EPS beat(4)4.86%
Min EPS beat(4)2.27%
Max EPS beat(4)9.54%
EPS beat(8)8
Avg EPS beat(8)4.73%
EPS beat(12)11
Avg EPS beat(12)3.24%
EPS beat(16)14
Avg EPS beat(16)2.96%
Revenue beat(2)0
Avg Revenue beat(2)-1.29%
Min Revenue beat(2)-1.66%
Max Revenue beat(2)-0.93%
Revenue beat(4)0
Avg Revenue beat(4)-1.04%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)-0.01%
Revenue beat(8)0
Avg Revenue beat(8)-1.1%
Revenue beat(12)4
Avg Revenue beat(12)-0.15%
Revenue beat(16)5
Avg Revenue beat(16)-4.51%
PT rev (1m)15.94%
PT rev (3m)20.24%
EPS NQ rev (1m)-1.73%
EPS NQ rev (3m)-9.75%
EPS NY rev (1m)0.38%
EPS NY rev (3m)1.03%
Revenue NQ rev (1m)0.05%
Revenue NQ rev (3m)-1.55%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)-1.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.21 | ||
| Fwd PE | 23.08 | ||
| P/S | 3.69 | ||
| P/FCF | 18.81 | ||
| P/OCF | 17.24 | ||
| P/B | 8.49 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.56 |
EPS(TTM)9.51
EY4.13%
EPS(NY)9.98
Fwd EY4.33%
FCF(TTM)12.24
FCFY5.32%
OCF(TTM)13.36
OCFY5.8%
SpS62.33
BVpS27.12
TBVpS-43.76
PEG (NY)5
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.39% | ||
| ROE | 22.06% | ||
| ROCE | 8.85% | ||
| ROIC | 7.56% | ||
| ROICexc | 8.79% | ||
| ROICexgc | 43.5% | ||
| OM | 14.68% | ||
| PM (TTM) | 9.6% | ||
| GM | 56.65% | ||
| FCFM | 19.63% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.26%
ROIC(5y)6.26%
ROICexc(3y)8.29%
ROICexc(5y)7.07%
ROICexgc(3y)40.75%
ROICexgc(5y)31.79%
ROCE(3y)8.5%
ROCE(5y)7.33%
ROICexcg growth 3Y26.58%
ROICexcg growth 5Y17.04%
ROICexc growth 3Y17.55%
ROICexc growth 5Y7.25%
OM growth 3Y13.36%
OM growth 5Y1.77%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
F-Score7
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.83 | ||
| Debt/FCF | 4.46 | ||
| Debt/EBITDA | 3.59 | ||
| Cap/Depr | 24.15% | ||
| Cap/Sales | 1.8% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 96.89% | ||
| Profit Quality | 204.5% | ||
| Current Ratio | 1.04 | ||
| Quick Ratio | 1 | ||
| Altman-Z | 3.5 |
F-Score7
WACC10.29%
ROIC/WACC0.73
Cap/Depr(3y)35.46%
Cap/Depr(5y)39.55%
Cap/Sales(3y)2.66%
Cap/Sales(5y)3.73%
Profit Quality(3y)294.17%
Profit Quality(5y)264.98%
High Growth Momentum
Growth
EPS 1Y (TTM)7.49%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%1.29%
EPS Next Y4.84%
EPS Next 2Y5.64%
EPS Next 3Y6.18%
EPS Next 5Y5.23%
Revenue 1Y (TTM)1.44%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.99%
Revenue Next Year3.55%
Revenue Next 2Y4.18%
Revenue Next 3Y4.27%
Revenue Next 5Y4.99%
EBIT growth 1Y4.79%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year54.39%
EBIT Next 3Y20.12%
EBIT Next 5Y10.85%
FCF growth 1Y1.63%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y-3.48%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%