INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
FRA:IBM - Deutsche Boerse Ag - US4592001014 - Common Stock - Currency: EUR
IBM gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 71 industry peers in the IT Services industry. There are concerns on the financial health of IBM while its profitability can be described as average. While showing a medium growth rate, IBM is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
IBM had positive earnings in the past year.
IBM had a positive operating cash flow in the past year.
Each year in the past 5 years IBM has been profitable.
IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of IBM (4.39%) is comparable to the rest of the industry.
With an excellent Return On Equity value of 22.06%, IBM belongs to the best of the industry, outperforming 84.62% of the companies in the same industry.
With a Return On Invested Capital value of 7.56%, IBM perfoms like the industry average, outperforming 46.15% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is below the industry average of 10.97%.
The last Return On Invested Capital (7.56%) for IBM is above the 3 year average (7.26%), which is a sign of increasing profitability.
| 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
IBM's Profit Margin of 9.60% is amongst the best of the industry. IBM outperforms 89.23% of its industry peers.
In the last couple of years the Profit Margin of IBM has declined.
With an excellent Operating Margin value of 14.68%, IBM belongs to the best of the industry, outperforming 90.77% of the companies in the same industry.
IBM's Operating Margin has improved in the last couple of years.
The Gross Margin of IBM (56.65%) is worse than 64.62% of its industry peers.
IBM's Gross Margin has been stable in the last couple of years.
| 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
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
The number of shares outstanding for IBM has been increased compared to 5 years ago.
Compared to 1 year ago, IBM has an improved debt to assets ratio.
2.2 Solvency
IBM has an Altman-Z score of 3.55. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM has a Altman-Z score of 3.55. This is in the better half of the industry: IBM outperforms 78.46% of its industry peers.
The Debt to FCF ratio of IBM is 4.46, which is a neutral value as it means it would take IBM, 4.46 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.46, IBM is doing worse than 61.54% of the companies in the same industry.
IBM has a Debt/Equity ratio of 1.83. This is a high value indicating a heavy dependency on external financing.
IBM has a Debt to Equity ratio of 1.83. This is amonst the worse of the industry: IBM underperforms 89.23% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.83 | ||
| Debt/FCF | 4.46 | ||
| Altman-Z | 3.55 |
ROIC/WACC0.67
WACC11.31%
2.3 Liquidity
A Current Ratio of 1.04 indicates that IBM should not have too much problems paying its short term obligations.
IBM has a worse Current ratio (1.04) than 67.69% of its industry peers.
A Quick Ratio of 1.00 indicates that IBM should not have too much problems paying its short term obligations.
IBM has a worse Quick ratio (1.00) than 67.69% of its industry peers.
| 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.
The Earnings Per Share has been decreasing by -4.21% on average over the past years.
The Revenue has been growing slightly by 1.44% 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)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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.23% yearly.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.97% yearly.
EPS Next Y4.45%
EPS Next 2Y4.5%
EPS Next 3Y4.23%
EPS Next 5Y5.23%
Revenue Next Year4.54%
Revenue Next 2Y4.31%
Revenue Next 3Y4.65%
Revenue Next 5Y4.97%
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 25.26.
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 28.47, IBM is valued at the same level.
Based on the Price/Forward Earnings ratio of 24.20, the valuation of IBM can be described as rather expensive.
Based on the Price/Forward Earnings ratio, IBM is valued a bit more expensive than the industry average as 67.69% of the companies are valued more cheaply.
IBM's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 92.74.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.26 | ||
| Fwd PE | 24.2 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, IBM is valued a bit more expensive than 75.38% of the companies in the same industry.
IBM's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. IBM is more expensive than 66.15% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.6 | ||
| EV/EBITDA | 20.17 |
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)5.68
PEG (5Y)N/A
EPS Next 2Y4.5%
EPS Next 3Y4.23%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.59%. Purely for dividend investing, there may be better candidates out there.
IBM's Dividend Yield is a higher than the industry average which is at 4.29.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.59% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.83%.
Dividend Growth(5Y)0.83%
Div Incr Years6
Div Non Decr Years6
5.3 Sustainability
102.04% 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.
DP102.04%
EPS Next 2Y4.5%
EPS Next 3Y4.23%
INTL BUSINESS MACHINES CORP
FRA:IBM (2/5/2025, 5:12:29 PM)
252.6
+1.3 (+0.52%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners61.42%
Inst Owner ChangeN/A
Ins Owners0.08%
Ins Owner ChangeN/A
Market Cap233.57B
Analysts69.23
Price Target210.94 (-16.49%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.59% |
Yearly Dividend6.68
Dividend Growth(5Y)0.83%
DP102.04%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.88%
Min EPS beat(2)2.27%
Max EPS beat(2)3.49%
EPS beat(4)4
Avg EPS beat(4)4.84%
Min EPS beat(4)2.27%
Max EPS beat(4)9.54%
EPS beat(8)8
Avg EPS beat(8)4.72%
EPS beat(12)11
Avg EPS beat(12)3.23%
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)-0.8%
PT rev (3m)5.56%
EPS NQ rev (1m)-0.18%
EPS NQ rev (3m)-1.71%
EPS NY rev (1m)-0.64%
EPS NY rev (3m)-0.06%
Revenue NQ rev (1m)-0.26%
Revenue NQ rev (3m)-1.28%
Revenue NY rev (1m)-0.26%
Revenue NY rev (3m)-0.92%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.26 | ||
| Fwd PE | 24.2 | ||
| P/S | 3.85 | ||
| P/FCF | 19.6 | ||
| P/OCF | 17.95 | ||
| P/B | 8.84 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.17 |
EPS(TTM)10
EY3.96%
EPS(NY)10.44
Fwd EY4.13%
FCF(TTM)12.89
FCFY5.1%
OCF(TTM)14.07
OCFY5.57%
SpS65.67
BVpS28.57
TBVpS-46.1
PEG (NY)5.68
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 | 3.55 |
F-Score7
WACC11.31%
ROIC/WACC0.67
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 Y4.45%
EPS Next 2Y4.5%
EPS Next 3Y4.23%
EPS Next 5Y5.23%
Revenue 1Y (TTM)1.44%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.99%
Revenue Next Year4.54%
Revenue Next 2Y4.31%
Revenue Next 3Y4.65%
Revenue Next 5Y4.97%
EBIT growth 1Y4.79%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year50.63%
EBIT Next 3Y14.39%
EBIT Next 5Y11.03%
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%