INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:IBM - US4592001014 - Common Stock
257.45 EUR
+1.15 (+0.45%)
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 76 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
IBM had positive earnings in the past year.
In the past year IBM had a positive cash flow from operations.
In the past 5 years IBM has always been profitable.
IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
IBM has a better Return On Assets (5.40%) than 64.47% of its industry peers.
With an excellent Return On Equity value of 28.34%, IBM belongs to the best of the industry, outperforming 90.79% of the companies in the same industry.
IBM has a Return On Invested Capital (8.07%) which is in line with its industry peers.
The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 26.78%.
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 93.42% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
The Operating Margin of IBM (16.06%) is better than 92.11% of its industry peers.
IBM's Operating Margin has been stable in the last couple of years.
The Gross Margin of IBM (57.81%) is comparable to the rest of the 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
IBM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
IBM has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, IBM has more shares outstanding
The debt/assets ratio for IBM has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.55 indicates that IBM is not in any danger for bankruptcy at the moment.
The Altman-Z score of IBM (3.55) is better than 75.00% of its industry peers.
IBM has a debt to FCF ratio of 5.27. This is a neutral value as IBM would need 5.27 years to pay back of all of its debts.
IBM has a Debt to FCF ratio (5.27) which is in line with its industry peers.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
IBM's Debt to Equity ratio of 1.98 is on the low side compared to the rest of the industry. IBM is outperformed by 77.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.55 |
ROIC/WACC0.93
WACC8.71%
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.
IBM has a worse Current ratio (0.93) than 72.37% of its industry peers.
IBM has a Quick 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.
With a Quick ratio value of 0.89, IBM is not doing good in the industry: 71.05% of the companies in the same industry are doing better.
| 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.
Measured over the past years, IBM shows a decrease in Earnings Per Share. The EPS has been decreasing by -4.21% on average per year.
The Revenue has been growing slightly by 4.51% in the past year.
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 6.07% 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 5.12% on average per year.
EPS Next Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
EPS Next 5Y6.07%
Revenue Next Year6.83%
Revenue Next 2Y5.7%
Revenue Next 3Y5.23%
Revenue Next 5Y5.12%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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
IBM is valuated quite expensively with a Price/Earnings ratio of 27.65.
Compared to the rest of the industry, the Price/Earnings ratio of IBM is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 26.57, IBM is valued at the same level.
The Price/Forward Earnings ratio is 24.64, which indicates a rather expensive current valuation of IBM.
Based on the Price/Forward Earnings ratio, IBM is valued a bit more expensive than 60.53% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (24.04), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.65 | ||
| Fwd PE | 24.64 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of IBM indicates a slightly more expensive valuation: IBM is more expensive than 73.68% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit more expensive than 60.53% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.69 | ||
| EV/EBITDA | 21.42 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates IBM does not grow enough to justify the current Price/Earnings ratio.
IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.49
PEG (5Y)N/A
EPS Next 2Y9.19%
EPS Next 3Y8.11%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.21%.
Compared to an average industry Dividend Yield of 2.28, IBM has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.00, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.21% |
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
IBM pays out 78.75% of its income as dividend. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP78.75%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
FRA:IBM (12/23/2025, 7:00:00 PM)
257.45
+1.15 (+0.45%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners64.13%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap240.65B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price Target251.66 (-2.25%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.21% |
Yearly Dividend5.66
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)2.17%
PT rev (3m)6.03%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)2.07%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.65 | ||
| Fwd PE | 24.64 | ||
| P/S | 4.34 | ||
| P/FCF | 23.69 | ||
| P/OCF | 21.04 | ||
| P/B | 10.16 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.42 |
EPS(TTM)9.31
EY3.62%
EPS(NY)10.45
Fwd EY4.06%
FCF(TTM)10.87
FCFY4.22%
OCF(TTM)12.24
OCFY4.75%
SpS59.36
BVpS25.33
TBVpS-46.49
PEG (NY)2.49
PEG (5Y)N/A
Graham Number72.84
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 | 3.55 |
F-Score6
WACC8.71%
ROIC/WACC0.93
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 Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
EPS Next 5Y6.07%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
Revenue Next Year6.83%
Revenue Next 2Y5.7%
Revenue Next 3Y5.23%
Revenue Next 5Y5.12%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year73.84%
EBIT Next 3Y24.02%
EBIT Next 5Y17.21%
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 1 / 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%.