INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
FRA:IBM - Deutsche Boerse Ag - US4592001014 - Common Stock - Currency: EUR
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 72 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.
In the past year IBM had a positive cash flow from operations.
IBM had positive earnings in each of the past 5 years.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
IBM has a Return On Assets (3.76%) which is in line with its industry peers.
IBM's Return On Equity of 20.36% is amongst the best of the industry. IBM outperforms 85.92% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.22%, IBM is in line with its industry, outperforming 45.07% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for IBM is below the industry average of 10.64%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.76% | ||
| ROE | 20.36% | ||
| ROIC | 7.22% |
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 8.71%, IBM belongs to the top of the industry, outperforming 90.14% of the companies in the same industry.
IBM's Profit Margin has declined in the last couple of years.
The Operating Margin of IBM (14.89%) is better than 92.96% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
IBM's Gross Margin of 57.04% is in line compared to the rest of the industry. IBM outperforms 43.66% of its industry peers.
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 | 14.89% | ||
| PM (TTM) | 8.71% | ||
| GM | 57.04% |
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.
The number of shares outstanding for IBM has been increased compared to 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 3.46 indicates that IBM is not in any danger for bankruptcy at the moment.
The Altman-Z score of IBM (3.46) is better than 69.01% of its industry peers.
The Debt to FCF ratio of IBM is 5.06, which is a neutral value as it means it would take IBM, 5.06 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 5.06, IBM is in line with its industry, outperforming 40.85% of the companies in the same industry.
IBM has a Debt/Equity ratio of 2.10. This is a high value indicating a heavy dependency on external financing.
IBM has a worse Debt to Equity ratio (2.10) than 83.10% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 5.06 | ||
| Altman-Z | 3.46 |
ROIC/WACC0.77
WACC9.43%
2.3 Liquidity
IBM has a Current Ratio of 1.01. This is a normal value and indicates that IBM is financially healthy and should not expect problems in meeting its short term obligations.
IBM has a Current ratio of 1.01. This is in the lower half of the industry: IBM underperforms 74.65% of its industry peers.
A Quick Ratio of 0.97 indicates that IBM may have some problems paying its short term obligations.
The Quick ratio of IBM (0.97) is worse than 74.65% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.22%.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.21% yearly.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 1.23% in the last year.
The Revenue has been growing slightly by 1.69% on average over the past years.
EPS 1Y (TTM)3.22%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%-4.76%
Revenue 1Y (TTM)1.23%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.55%
3.2 Future
Based on estimates for the next years, IBM will show a small growth in Earnings Per Share. The EPS will grow by 6.40% on average per year.
The Revenue is expected to grow by 4.75% on average over the next years.
EPS Next Y6.83%
EPS Next 2Y6.59%
EPS Next 3Y6.29%
EPS Next 5Y6.4%
Revenue Next Year5.51%
Revenue Next 2Y4.94%
Revenue Next 3Y4.74%
Revenue Next 5Y4.75%
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
IBM is valuated quite expensively with a Price/Earnings ratio of 28.57.
IBM's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.45, IBM is valued at the same level.
IBM is valuated rather expensively with a Price/Forward Earnings ratio of 24.96.
IBM's Price/Forward Earnings is on the same level as the industry average.
IBM's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.57 | ||
| Fwd PE | 24.96 |
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 73.24% of the companies listed 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 60.56% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.78 | ||
| EV/EBITDA | 22.04 |
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.
The decent profitability rating of IBM may justify a higher PE ratio.
PEG (NY)4.18
PEG (5Y)N/A
EPS Next 2Y6.59%
EPS Next 3Y6.29%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.30%. 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 6.92.
Compared to an average S&P500 Dividend Yield of 2.38, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.3% |
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
IBM pays out 112.79% of its income as dividend. This is not a sustainable payout ratio.
IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP112.79%
EPS Next 2Y6.59%
EPS Next 3Y6.29%
FRA:IBM (7/4/2025, 7:00:00 PM)
248.6
+1.45 (+0.59%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.15%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap231.05B
Analysts72.59
Price Target227.31 (-8.56%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.3% |
Yearly Dividend5.71
Dividend Growth(5Y)0.83%
DP112.79%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.28%
Min EPS beat(2)3.59%
Max EPS beat(2)12.97%
EPS beat(4)4
Avg EPS beat(4)7.09%
Min EPS beat(4)2.27%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.47%
EPS beat(12)11
Avg EPS beat(12)4.29%
EPS beat(16)14
Avg EPS beat(16)3.31%
Revenue beat(2)1
Avg Revenue beat(2)-0.46%
Min Revenue beat(2)-0.93%
Max Revenue beat(2)0.01%
Revenue beat(4)1
Avg Revenue beat(4)-0.65%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)0.01%
Revenue beat(8)1
Avg Revenue beat(8)-0.89%
Revenue beat(12)4
Avg Revenue beat(12)-0.27%
Revenue beat(16)6
Avg Revenue beat(16)-2.96%
PT rev (1m)1.25%
PT rev (3m)-7.21%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)1.21%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)1.89%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.36%
Revenue NY rev (1m)0.17%
Revenue NY rev (3m)1.89%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.57 | ||
| Fwd PE | 24.96 | ||
| P/S | 4.33 | ||
| P/FCF | 21.78 | ||
| P/OCF | 19.95 | ||
| P/B | 10.13 | ||
| P/tB | N/A | ||
| EV/EBITDA | 22.04 |
EPS(TTM)8.7
EY3.5%
EPS(NY)9.96
Fwd EY4.01%
FCF(TTM)11.41
FCFY4.59%
OCF(TTM)12.46
OCFY5.01%
SpS57.38
BVpS24.55
TBVpS-47.1
PEG (NY)4.18
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.76% | ||
| ROE | 20.36% | ||
| ROCE | 8.46% | ||
| ROIC | 7.22% | ||
| ROICexc | 8.58% | ||
| ROICexgc | 54.54% | ||
| OM | 14.89% | ||
| PM (TTM) | 8.71% | ||
| GM | 57.04% | ||
| FCFM | 19.89% |
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-Score5
Asset Turnover0.43
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 5.06 | ||
| Debt/EBITDA | 4.01 | ||
| Cap/Depr | 24.38% | ||
| Cap/Sales | 1.83% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 97.03% | ||
| Profit Quality | 228.33% | ||
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 | ||
| Altman-Z | 3.46 |
F-Score5
WACC9.43%
ROIC/WACC0.77
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)3.22%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%-4.76%
EPS Next Y6.83%
EPS Next 2Y6.59%
EPS Next 3Y6.29%
EPS Next 5Y6.4%
Revenue 1Y (TTM)1.23%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.55%
Revenue Next Year5.51%
Revenue Next 2Y4.94%
Revenue Next 3Y4.74%
Revenue Next 5Y4.75%
EBIT growth 1Y5.13%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year59.42%
EBIT Next 3Y21.07%
EBIT Next 5Y10.85%
FCF growth 1Y39.31%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y24.5%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%