INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
FRA:IBM - Deutsche Boerse Ag - US4592001014 - Common Stock - Currency: EUR
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 65 industry peers in the IT Services industry. IBM has an excellent profitability rating, but 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.
In the past year IBM had a positive cash flow from operations.
In the past 5 years IBM has always been profitable.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
IBM has a Return On Assets (4.39%) which is comparable to the rest of the industry.
IBM has a Return On Equity of 22.06%. This is amongst the best in the industry. IBM outperforms 84.62% of its industry peers.
The Return On Invested Capital of IBM (7.56%) is comparable to the rest of the industry.
IBM had an Average Return On Invested Capital over the past 3 years of 7.26%. This is below the industry average of 10.96%.
The 3 year average ROIC (7.26%) for IBM 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
The Profit Margin of IBM (9.60%) is better than 90.77% 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.
In the last couple of years the Operating Margin of IBM has grown nicely.
IBM has a Gross Margin of 56.65%. This is comparable to the rest of the industry: IBM outperforms 44.62% 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 | 14.68% | ||
| 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.
The number of shares outstanding for IBM has been increased compared to 1 year ago.
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 3.39. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.39, IBM is in the better half of the industry, outperforming 72.31% of the companies in the same industry.
IBM has a debt to FCF ratio of 4.46. This is a neutral value as IBM would need 4.46 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.46, IBM is in line with its industry, outperforming 47.69% of the companies in the same industry.
A Debt/Equity ratio of 1.83 is on the high side and indicates that IBM has dependencies on debt financing.
IBM's Debt to Equity ratio of 1.83 is on the low side compared to the rest of the industry. IBM is outperformed by 83.08% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.83 | ||
| Debt/FCF | 4.46 | ||
| Altman-Z | 3.39 |
ROIC/WACC0.84
WACC9.04%
2.3 Liquidity
A Current Ratio of 1.04 indicates that IBM should not have too much problems paying its short term obligations.
The Current ratio of IBM (1.04) is worse 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.
The Quick ratio of IBM (1.00) is worse than 67.69% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.49%.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.21% yearly.
IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 1.44%.
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 7.16% yearly.
The Revenue is expected to grow by 4.68% on average over the next years.
EPS Next Y4.66%
EPS Next 2Y5.5%
EPS Next 3Y6.12%
EPS Next 5Y7.16%
Revenue Next Year3.47%
Revenue Next 2Y4.12%
Revenue Next 3Y4.23%
Revenue Next 5Y4.68%
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 rather expensively with a Price/Earnings ratio of 22.20.
Compared to the rest of the industry, the Price/Earnings ratio of IBM is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 28.79. IBM is valued slightly cheaper when compared to this.
The Price/Forward Earnings ratio is 21.21, which indicates a rather expensive current valuation of IBM.
The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
IBM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.38, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.2 | ||
| Fwd PE | 21.21 |
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 70.77% of the companies listed in the same industry.
IBM's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.26 | ||
| EV/EBITDA | 18.08 |
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)4.77
PEG (5Y)N/A
EPS Next 2Y5.5%
EPS Next 3Y6.12%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.80%. 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 7.76.
Compared to an average S&P500 Dividend Yield of 2.51, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.8% |
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 102.04% 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.
DP102.04%
EPS Next 2Y5.5%
EPS Next 3Y6.12%
FRA:IBM (4/25/2025, 7:00:00 PM)
201.6
+1.4 (+0.7%)
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 Cap186.94B
Analysts73.08
Price Target238.04 (18.08%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.8% |
Yearly Dividend5.88
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)2.93%
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)-2.83%
PT rev (3m)11.95%
EPS NQ rev (1m)-0.44%
EPS NQ rev (3m)-10.63%
EPS NY rev (1m)-0.18%
EPS NY rev (3m)-0.44%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)-1.52%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)-1.59%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.2 | ||
| Fwd PE | 21.21 | ||
| P/S | 3.39 | ||
| P/FCF | 17.26 | ||
| P/OCF | 15.82 | ||
| P/B | 7.79 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.08 |
EPS(TTM)9.08
EY4.5%
EPS(NY)9.5
Fwd EY4.71%
FCF(TTM)11.68
FCFY5.79%
OCF(TTM)12.75
OCFY6.32%
SpS59.49
BVpS25.89
TBVpS-41.77
PEG (NY)4.77
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 | 3.39 |
F-Score7
WACC9.04%
ROIC/WACC0.84
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 Y4.66%
EPS Next 2Y5.5%
EPS Next 3Y6.12%
EPS Next 5Y7.16%
Revenue 1Y (TTM)1.44%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.99%
Revenue Next Year3.47%
Revenue Next 2Y4.12%
Revenue Next 3Y4.23%
Revenue Next 5Y4.68%
EBIT growth 1Y4.79%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year53.02%
EBIT Next 3Y20.05%
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%