INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - FRA:IBM - US4592001014 - Common Stock
238.45 EUR
-3.15 (-1.3%)
Overall IBM gets a fundamental rating of 4 out of 10. We evaluated IBM against 74 industry peers in the IT Services industry. IBM has an excellent profitability rating, but there are concerns on its financial health. 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.
In the past 5 years IBM has always been profitable.
Each year in the past 5 years IBM had a positive operating cash flow.
1.2 Ratios
IBM has a Return On Assets (3.93%) which is comparable to the rest of the industry.
IBM has a better Return On Equity (21.20%) than 86.49% of its industry peers.
IBM has a Return On Invested Capital (7.55%) which is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for IBM is below the industry average of 11.84%.
The 3 year average ROIC (7.26%) for IBM is below the current ROIC(7.55%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 21.2% | ||
| ROIC | 7.55% |
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 has a Profit Margin of 9.11%. This is amongst the best in the industry. IBM outperforms 89.19% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
IBM's Operating Margin of 15.32% is amongst the best of the industry. IBM outperforms 91.89% of its industry peers.
In the last couple of years the Operating Margin of IBM has grown nicely.
IBM's Gross Margin of 57.57% is in line compared to the rest of the industry. IBM outperforms 48.65% of its industry peers.
IBM's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.32% | ||
| PM (TTM) | 9.11% | ||
| GM | 57.57% |
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so IBM is destroying value.
The number of shares outstanding for IBM has been increased compared to 1 year ago.
IBM has more shares outstanding than it did 5 years ago.
IBM has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.34 indicates that IBM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.34, IBM is in the better half of the industry, outperforming 68.92% of the companies in the same industry.
IBM has a debt to FCF ratio of 5.46. This is a neutral value as IBM would need 5.46 years to pay back of all of its debts.
The Debt to FCF ratio of IBM (5.46) is comparable to the rest of the industry.
IBM has a Debt/Equity ratio of 2.01. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 2.01, IBM is not doing good in the industry: 81.08% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.34 |
ROIC/WACC0.9
WACC8.44%
2.3 Liquidity
IBM has a Current Ratio of 0.91. 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 Current ratio of 0.91. This is in the lower half of the industry: IBM underperforms 75.68% of its industry peers.
IBM has a Quick Ratio of 0.91. 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 Quick ratio (0.87) than 74.32% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 4.32% 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 2.69%.
IBM shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.69% yearly.
EPS 1Y (TTM)4.32%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.23%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
3.2 Future
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.21% yearly.
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 Y8.85%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y6.21%
Revenue Next Year6.38%
Revenue Next 2Y5.37%
Revenue Next 3Y5.04%
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
A Price/Earnings ratio of 25.97 indicates a quite expensive valuation of IBM.
The rest of the industry has a similar Price/Earnings ratio as IBM.
Compared to an average S&P500 Price/Earnings ratio of 27.34, IBM is valued at the same level.
Based on the Price/Forward Earnings ratio of 22.93, the valuation of IBM can be described as rather expensive.
62.16% of the companies in the same industry are cheaper than IBM, based on the Price/Forward Earnings ratio.
IBM's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.86.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 22.93 |
4.2 Price Multiples
77.03% of the companies in the same industry are cheaper than IBM, based on the Enterprise Value to EBITDA ratio.
IBM's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. IBM is more expensive than 63.51% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.86 | ||
| EV/EBITDA | 20.88 |
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)2.93
PEG (5Y)N/A
EPS Next 2Y7.92%
EPS Next 3Y7.16%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.33%. 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 3.93.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.33% |
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
106.31% of the earnings are spent on dividend by IBM. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP106.31%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
FRA:IBM (10/14/2025, 5:23:08 PM)
238.45
-3.15 (-1.3%)
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 Cap222.12B
Analysts69.63
Price Target240.73 (0.96%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.33% |
Yearly Dividend5.78
Dividend Growth(5Y)0.83%
DP106.31%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.93%
Min EPS beat(2)4.89%
Max EPS beat(2)12.97%
EPS beat(4)4
Avg EPS beat(4)5.93%
Min EPS beat(4)2.27%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.15%
EPS beat(12)11
Avg EPS beat(12)4.65%
EPS beat(16)14
Avg EPS beat(16)3.57%
Revenue beat(2)2
Avg Revenue beat(2)0.68%
Min Revenue beat(2)0.01%
Max Revenue beat(2)1.34%
Revenue beat(4)2
Avg Revenue beat(4)-0.31%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)1.34%
Revenue beat(8)2
Avg Revenue beat(8)-0.52%
Revenue beat(12)4
Avg Revenue beat(12)-0.27%
Revenue beat(16)7
Avg Revenue beat(16)-1.44%
PT rev (1m)0.33%
PT rev (3m)5.9%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)-0.18%
EPS NY rev (1m)0.17%
EPS NY rev (3m)1.89%
Revenue NQ rev (1m)0.01%
Revenue NQ rev (3m)0.25%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 22.93 | ||
| P/S | 4.01 | ||
| P/FCF | 21.86 | ||
| P/OCF | 19.35 | ||
| P/B | 9.34 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.88 |
EPS(TTM)9.18
EY3.85%
EPS(NY)10.4
Fwd EY4.36%
FCF(TTM)10.91
FCFY4.58%
OCF(TTM)12.33
OCFY5.17%
SpS59.42
BVpS25.53
TBVpS-48.48
PEG (NY)2.93
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 21.2% | ||
| ROCE | 8.85% | ||
| ROIC | 7.55% | ||
| ROICexc | 8.78% | ||
| ROICexgc | 53.5% | ||
| OM | 15.32% | ||
| PM (TTM) | 9.11% | ||
| GM | 57.57% | ||
| FCFM | 18.36% |
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 | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Debt/EBITDA | 3.77 | ||
| Cap/Depr | 31.62% | ||
| Cap/Sales | 2.38% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 90.78% | ||
| Profit Quality | 201.58% | ||
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 3.34 |
F-Score5
WACC8.44%
ROIC/WACC0.9
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)4.32%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.23%
EPS Next Y8.85%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.38%
Revenue Next 2Y5.37%
Revenue Next 3Y5.04%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
EBIT Next 5Y19.31%
FCF growth 1Y14.17%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y8.18%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%