INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - FRA:IBM - US4592001014 - Common Stock
217.6 EUR
-2.8 (-1.27%)
Overall IBM gets a fundamental rating of 4 out of 10. We evaluated IBM against 71 industry peers in the IT Services industry. While IBM has a great profitability rating, there are quite some 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
IBM had positive earnings in the past year.
IBM had a positive operating cash flow in the past year.
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
Looking at the Return On Assets, with a value of 3.93%, IBM is in line with its industry, outperforming 46.48% of the companies in the same industry.
IBM has a better Return On Equity (21.20%) than 83.10% of its industry peers.
IBM has a Return On Invested Capital of 7.55%. This is comparable to the rest of the industry: IBM outperforms 45.07% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is below the industry average of 11.13%.
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
Looking at the Profit Margin, with a value of 9.11%, IBM belongs to the top of the industry, outperforming 85.92% of the companies in the same industry.
IBM's Profit Margin has declined in the last couple of years.
IBM has a Operating Margin of 15.32%. This is amongst the best in the industry. IBM outperforms 90.14% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
IBM's Gross Margin of 57.57% is in line compared to the rest of the industry. IBM outperforms 42.25% 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.
IBM has more shares outstanding than it did 1 year ago.
The number of shares outstanding for IBM has been increased compared to 5 years ago.
IBM has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.22 indicates that IBM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.22, IBM is in the better half of the industry, outperforming 67.61% of the companies in the same industry.
The Debt to FCF ratio of IBM is 5.46, which is a neutral value as it means it would take IBM, 5.46 years of fcf income to pay off all of its debts.
IBM has a Debt to FCF ratio of 5.46. This is in the lower half of the industry: IBM underperforms 61.97% of its industry peers.
A Debt/Equity ratio of 2.01 is on the high side and indicates that IBM has dependencies on debt financing.
IBM has a worse Debt to Equity ratio (2.01) than 83.10% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.22 |
ROIC/WACC0.86
WACC8.83%
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.
With a Current ratio value of 0.91, IBM is not doing good in the industry: 80.28% of the companies in the same industry are doing better.
A Quick Ratio of 0.87 indicates that IBM may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.87, IBM is doing worse than 80.28% of the companies in the same industry.
| 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.
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 2.69% in the past year.
The Revenue has been growing slightly by 1.69% on average over the past years.
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
Based on estimates for the next years, IBM will show a small growth in Earnings Per Share. The EPS will grow by 6.21% on average per year.
The Revenue is expected to grow by 4.94% on average over the next years.
EPS Next Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
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.
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 24.02.
IBM's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of IBM to the average of the S&P500 Index (27.30), we can say IBM is valued inline with the index average.
With a Price/Forward Earnings ratio of 21.27, IBM is valued on the expensive side.
IBM's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.73, IBM is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.02 | ||
| Fwd PE | 21.27 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, IBM is valued a bit more expensive than 76.06% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit more expensive than the industry average as 61.97% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.2 | ||
| EV/EBITDA | 19.32 |
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)2.77
PEG (5Y)N/A
EPS Next 2Y7.71%
EPS Next 3Y6.93%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.61%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 7.63, IBM pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.41, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
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.
IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP106.31%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
FRA:IBM (9/12/2025, 7:00:00 PM)
217.6
-2.8 (-1.27%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.2%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap202.70B
Analysts70
Price Target237.35 (9.08%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
Yearly Dividend5.7
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)-0.87%
PT rev (3m)5.59%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.32%
EPS NY rev (1m)1.96%
EPS NY rev (3m)1.68%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.89%
Revenue NY rev (1m)0.3%
Revenue NY rev (3m)0.98%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.02 | ||
| Fwd PE | 21.27 | ||
| P/S | 3.71 | ||
| P/FCF | 20.2 | ||
| P/OCF | 17.88 | ||
| P/B | 8.63 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.32 |
EPS(TTM)9.06
EY4.16%
EPS(NY)10.23
Fwd EY4.7%
FCF(TTM)10.77
FCFY4.95%
OCF(TTM)12.17
OCFY5.59%
SpS58.67
BVpS25.2
TBVpS-47.87
PEG (NY)2.77
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 | 3.22 |
F-Score5
WACC8.83%
ROIC/WACC0.86
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 Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.78%
EBIT Next 3Y26.23%
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%