INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - FRA:IBM - US4592001014 - Common Stock
270.3 EUR
+3 (+1.12%)
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 70 industry peers in the IT Services industry. While IBM belongs to the best of the industry regarding profitability, there are concerns on its financial health. IBM is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year IBM was profitable.
IBM had a positive operating cash flow in the past year.
Each year in the past 5 years IBM has been profitable.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.40%, IBM is in the better half of the industry, outperforming 62.86% of the companies in the same industry.
IBM's Return On Equity of 28.34% is amongst the best of the industry. IBM outperforms 90.00% of its industry peers.
The Return On Invested Capital of IBM (8.07%) is comparable to the rest of the industry.
IBM had an Average Return On Invested Capital over the past 3 years of 7.07%. This is significantly below the industry average of 21.24%.
The 3 year average ROIC (7.07%) for IBM is below the current ROIC(8.07%), indicating increased profibility in the last year.
| 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
IBM has a Profit Margin of 12.09%. This is amongst the best in the industry. IBM outperforms 91.43% of its industry peers.
In the last couple of years the Profit Margin of IBM has declined.
IBM has a better Operating Margin (16.06%) than 90.00% of its industry peers.
In the last couple of years the Operating Margin of IBM has remained more or less at the same level.
With a Gross Margin value of 57.81%, IBM perfoms like the industry average, outperforming 41.43% of the companies in the same industry.
In the last couple of years the Gross Margin of IBM 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), IBM is destroying value.
Compared to 1 year ago, IBM has more shares outstanding
Compared to 5 years ago, IBM has more shares outstanding
Compared to 1 year ago, IBM has an improved debt to assets ratio.
2.2 Solvency
IBM has an Altman-Z score of 3.57. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM has a better Altman-Z score (3.57) than 75.71% of its industry peers.
The Debt to FCF ratio of IBM is 5.27, which is a neutral value as it means it would take IBM, 5.27 years of fcf income to pay off all of its debts.
IBM's Debt to FCF ratio of 5.27 is in line compared to the rest of the industry. IBM outperforms 45.71% of its industry peers.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.98, IBM is doing worse than 80.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.57 |
ROIC/WACC0.95
WACC8.52%
2.3 Liquidity
IBM has a Current Ratio of 0.93. This is a bad value and indicates that IBM is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.93, IBM is doing worse than 71.43% of the companies in the same industry.
A Quick Ratio of 0.89 indicates that IBM may have some problems paying its short term obligations.
IBM has a Quick ratio of 0.89. This is in the lower half of the industry: IBM underperforms 72.86% 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.
IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 4.51%.
Measured over the past years, IBM 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 6.21% on average over the next years.
Based on estimates for the next years, IBM will show a small growth in Revenue. The Revenue will grow by 4.94% on average per year.
EPS Next Y8.82%
EPS Next 2Y7.9%
EPS Next 3Y7.12%
EPS Next 5Y6.21%
Revenue Next Year6.33%
Revenue Next 2Y5.38%
Revenue Next 3Y5.05%
Revenue Next 5Y4.94%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 28.42, the valuation of IBM can be described as expensive.
IBM's Price/Earnings ratio is in line with the industry average.
IBM's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.67.
With a Price/Forward Earnings ratio of 25.92, IBM can be considered very expensive at the moment.
Based on the Price/Forward Earnings ratio, IBM is valued a bit more expensive than the industry average as 64.29% of the companies are valued more cheaply.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (31.86), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.42 | ||
| Fwd PE | 25.92 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, IBM is valued a bit more expensive than 74.29% of the companies in the same industry.
61.43% of the companies in the same industry are cheaper than IBM, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.26 | ||
| EV/EBITDA | 21.65 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of IBM may justify a higher PE ratio.
PEG (NY)3.22
PEG (5Y)N/A
EPS Next 2Y7.9%
EPS Next 3Y7.12%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.17%.
Compared to an average industry Dividend Yield of 3.86, IBM has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.17% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.81%.
Dividend Growth(5Y)0.81%
Div Incr Years6
Div Non Decr Years6
5.3 Sustainability
78.75% of the earnings are spent on dividend by IBM. This is not a sustainable payout ratio.
IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP78.75%
EPS Next 2Y7.9%
EPS Next 3Y7.12%
FRA:IBM (11/7/2025, 11:22:49 AM)
270.3
+3 (+1.12%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.04%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap251.79B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts69.63
Price Target250.2 (-7.44%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.17% |
Yearly Dividend5.78
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.08%
Min EPS beat(2)4.89%
Max EPS beat(2)7.28%
EPS beat(4)4
Avg EPS beat(4)7.18%
Min EPS beat(4)3.59%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.75%
EPS beat(12)11
Avg EPS beat(12)5.17%
EPS beat(16)15
Avg EPS beat(16)4.03%
Revenue beat(2)2
Avg Revenue beat(2)0.92%
Min Revenue beat(2)0.5%
Max Revenue beat(2)1.34%
Revenue beat(4)3
Avg Revenue beat(4)0.23%
Min Revenue beat(4)-0.93%
Max Revenue beat(4)1.34%
Revenue beat(8)3
Avg Revenue beat(8)-0.35%
Revenue beat(12)4
Avg Revenue beat(12)-0.51%
Revenue beat(16)8
Avg Revenue beat(16)0.23%
PT rev (1m)5.41%
PT rev (3m)7.68%
EPS NQ rev (1m)-0.45%
EPS NQ rev (3m)1.19%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)2.11%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.96%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)0.81%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.42 | ||
| Fwd PE | 25.92 | ||
| P/S | 4.44 | ||
| P/FCF | 24.26 | ||
| P/OCF | 21.54 | ||
| P/B | 10.41 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.65 |
EPS(TTM)9.51
EY3.52%
EPS(NY)10.43
Fwd EY3.86%
FCF(TTM)11.14
FCFY4.12%
OCF(TTM)12.55
OCFY4.64%
SpS60.88
BVpS25.97
TBVpS-47.68
PEG (NY)3.22
PEG (5Y)N/A
Graham Number74.55
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.4% | ||
| ROE | 28.34% | ||
| ROCE | 9.45% | ||
| ROIC | 8.07% | ||
| ROICexc | 9.31% | ||
| ROICexgc | 52.18% | ||
| OM | 16.06% | ||
| PM (TTM) | 12.09% | ||
| GM | 57.81% | ||
| FCFM | 18.31% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.07%
ROIC(5y)6.14%
ROICexc(3y)8.07%
ROICexc(5y)6.94%
ROICexgc(3y)39.64%
ROICexgc(5y)31.12%
ROCE(3y)8.28%
ROCE(5y)7.2%
ROICexgc growth 3Y23.43%
ROICexgc growth 5Y15.29%
ROICexc growth 3Y14.68%
ROICexc growth 5Y5.67%
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%
F-Score6
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Debt/EBITDA | 3.6 | ||
| Cap/Depr | 31.23% | ||
| Cap/Sales | 2.31% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.87% | ||
| Profit Quality | 151.41% | ||
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 | ||
| Altman-Z | 3.57 |
F-Score6
WACC8.52%
ROIC/WACC0.95
Cap/Depr(3y)39.45%
Cap/Depr(5y)41.95%
Cap/Sales(3y)2.96%
Cap/Sales(5y)3.91%
Profit Quality(3y)291.08%
Profit Quality(5y)263.12%
High Growth Momentum
Growth
EPS 1Y (TTM)6.71%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.22%
EPS Next Y8.82%
EPS Next 2Y7.9%
EPS Next 3Y7.12%
EPS Next 5Y6.21%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
Revenue Next Year6.33%
Revenue Next 2Y5.38%
Revenue Next 3Y5.05%
Revenue Next 5Y4.94%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
EBIT Next 5Y19.31%
FCF growth 1Y3.97%
FCF growth 3Y5.46%
FCF growth 5Y-0.17%
OCF growth 1Y0.37%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%
INTL BUSINESS MACHINES CORP / IBM.DE FAQ
What is the fundamental rating for IBM stock?
ChartMill assigns a fundamental rating of 4 / 10 to IBM.DE.
What is the valuation status for IBM stock?
ChartMill assigns a valuation rating of 2 / 10 to INTL BUSINESS MACHINES CORP (IBM.DE). This can be considered as Overvalued.
How profitable is INTL BUSINESS MACHINES CORP (IBM.DE) stock?
INTL BUSINESS MACHINES CORP (IBM.DE) has a profitability rating of 7 / 10.
How financially healthy is INTL BUSINESS MACHINES CORP?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM.DE) is 3 / 10.
Is the dividend of INTL BUSINESS MACHINES CORP sustainable?
The dividend rating of INTL BUSINESS MACHINES CORP (IBM.DE) is 4 / 10 and the dividend payout ratio is 78.75%.