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 70 industry peers in the IT Services industry. IBM scores excellent on profitability, but there are concerns on its financial health. IBM is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year IBM was profitable.
IBM had a positive operating cash flow in the past year.
Each year in the past 5 years IBM has been profitable.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
With a Return On Assets value of 4.39%, IBM perfoms like the industry average, outperforming 56.00% of the companies in the same industry.
The Return On Equity of IBM (22.06%) is better than 86.67% of its industry peers.
IBM's Return On Invested Capital of 7.56% is in line compared to the rest of the industry. IBM outperforms 53.33% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is below the industry average of 11.01%.
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 has a Profit Margin of 9.60%. This is amongst the best in the industry. IBM outperforms 88.00% of its industry peers.
In the last couple of years the Profit Margin of IBM has declined.
IBM has a better Operating Margin (14.68%) than 90.67% of its industry peers.
In the last couple of years the Operating Margin of IBM has grown nicely.
The Gross Margin of IBM (56.65%) is comparable to the rest of the industry.
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
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
IBM has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.51 indicates that IBM is not in any danger for bankruptcy at the moment.
IBM's Altman-Z score of 3.51 is fine compared to the rest of the industry. IBM outperforms 80.00% 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.
IBM's Debt to FCF ratio of 4.46 is in line compared to the rest of the industry. IBM outperforms 49.33% of its industry peers.
A Debt/Equity ratio of 1.83 is on the high side and indicates that IBM has dependencies on debt financing.
The Debt to Equity ratio of IBM (1.83) is worse than 78.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.83 | ||
| Debt/FCF | 4.46 | ||
| Altman-Z | 3.51 |
ROIC/WACC0.76
WACC9.97%
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 62.67% of its industry peers.
IBM has a Quick Ratio of 1.00. 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 Quick ratio of 1.00. This is in the lower half of the industry: IBM underperforms 61.33% 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.
The Revenue has been growing slightly by 1.44% in the past year.
IBM shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.69% yearly.
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
The Earnings Per Share is expected to grow by 5.23% on average over the next years.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.99% yearly.
EPS Next Y4.84%
EPS Next 2Y5.64%
EPS Next 3Y6.18%
EPS Next 5Y5.23%
Revenue Next Year3.55%
Revenue Next 2Y4.18%
Revenue Next 3Y4.27%
Revenue Next 5Y4.99%
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 24.49 indicates a rather expensive valuation of IBM.
IBM's Price/Earnings ratio is in line with the industry average.
IBM's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 29.35.
Based on the Price/Forward Earnings ratio of 23.35, the valuation of IBM can be described as rather expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.10, IBM is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.49 | ||
| Fwd PE | 23.35 |
4.2 Price Multiples
66.67% 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 is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.03 | ||
| EV/EBITDA | 19.76 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)5.06
PEG (5Y)N/A
EPS Next 2Y5.64%
EPS Next 3Y6.18%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.69%, IBM has a reasonable but not impressive dividend return.
IBM's Dividend Yield is a higher than the industry average which is at 4.29.
Compared to an average S&P500 Dividend Yield of 2.33, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.69% |
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.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP102.04%
EPS Next 2Y5.64%
EPS Next 3Y6.18%
FRA:IBM (3/7/2025, 7:00:00 PM)
232.9
+0.45 (+0.19%)
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 Cap215.96B
Analysts73.08
Price Target244.98 (5.19%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.69% |
Yearly Dividend6.16
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)16.14%
PT rev (3m)18.35%
EPS NQ rev (1m)-1.73%
EPS NQ rev (3m)-9.75%
EPS NY rev (1m)0.38%
EPS NY rev (3m)1.03%
Revenue NQ rev (1m)0.05%
Revenue NQ rev (3m)-1.55%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)-1.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.49 | ||
| Fwd PE | 23.35 | ||
| P/S | 3.74 | ||
| P/FCF | 19.03 | ||
| P/OCF | 17.44 | ||
| P/B | 8.59 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.76 |
EPS(TTM)9.51
EY4.08%
EPS(NY)9.98
Fwd EY4.28%
FCF(TTM)12.24
FCFY5.25%
OCF(TTM)13.36
OCFY5.73%
SpS62.33
BVpS27.12
TBVpS-43.76
PEG (NY)5.06
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 | 3.51 |
F-Score7
WACC9.97%
ROIC/WACC0.76
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 Y4.84%
EPS Next 2Y5.64%
EPS Next 3Y6.18%
EPS Next 5Y5.23%
Revenue 1Y (TTM)1.44%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.99%
Revenue Next Year3.55%
Revenue Next 2Y4.18%
Revenue Next 3Y4.27%
Revenue Next 5Y4.99%
EBIT growth 1Y4.79%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year54.39%
EBIT Next 3Y20.12%
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%