INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - Frankfurt Stock Exchange - FRA:IBM - US4592001014 - Common Stock
257.4 EUR
+2.25 (+0.88%)
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. While IBM belongs to the best of the industry regarding profitability, 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
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.
Each year in the past 5 years IBM had a positive operating cash flow.
1.2 Ratios
With a decent Return On Assets value of 5.40%, IBM is doing good in the industry, outperforming 64.38% of the companies in the same industry.
IBM's Return On Equity of 28.34% is amongst the best of the industry. IBM outperforms 89.04% of its industry peers.
IBM has a Return On Invested Capital (8.07%) which is in line with its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is significantly below the industry average of 14.09%.
The last Return On Invested Capital (8.07%) for IBM is above the 3 year average (7.07%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.4% | ||
| ROE | 28.34% | ||
| ROIC | 8.07% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.07%
ROIC(5y)6.14%
1.3 Margins
IBM has a better Profit Margin (12.09%) than 91.78% of its industry peers.
In the last couple of years the Profit Margin of IBM has declined.
Looking at the Operating Margin, with a value of 16.06%, IBM belongs to the top of the industry, outperforming 91.78% of the companies in the same industry.
In the last couple of years the Operating Margin of IBM has remained more or less at the same level.
Looking at the Gross Margin, with a value of 57.81%, IBM is in line with its industry, outperforming 47.95% of the companies in the same industry.
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 | 16.06% | ||
| PM (TTM) | 12.09% | ||
| GM | 57.81% |
OM growth 3Y10.6%
OM growth 5Y0.28%
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.
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.
The debt/assets ratio for IBM has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 3.52 indicates that IBM is not in any danger for bankruptcy at the moment.
IBM's Altman-Z score of 3.52 is fine compared to the rest of the industry. IBM outperforms 78.08% of its industry peers.
The Debt to FCF ratio of IBM is 5.27, which is a neutral value as it means it would take IBM, 5.27 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of IBM (5.27) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.98 is on the high side and indicates that IBM has dependencies on debt financing.
With a Debt to Equity ratio value of 1.98, IBM is not doing good in the industry: 80.82% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.52 |
ROIC/WACC0.96
WACC8.4%
2.3 Liquidity
A Current Ratio of 0.93 indicates that IBM may have some problems paying its short term obligations.
The Current ratio of IBM (0.93) is worse than 72.60% of its industry peers.
A Quick Ratio of 0.89 indicates that IBM may have some problems paying its short term obligations.
IBM has a Quick ratio of 0.89. This is in the lower half of the industry: IBM underperforms 73.97% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 6.71% 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.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 4.51% in the last 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)6.71%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.22%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
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 6.07% on average per year.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.12% yearly.
EPS Next Y11.14%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
EPS Next 5Y6.07%
Revenue Next Year6.83%
Revenue Next 2Y5.65%
Revenue Next 3Y5.19%
Revenue Next 5Y5.12%
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
With a Price/Earnings ratio of 27.04, IBM can be considered very expensive at the moment.
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 25.47.
With a Price/Forward Earnings ratio of 24.15, IBM is valued on the expensive side.
IBM's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. IBM is more expensive than 61.64% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 34.42, IBM is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.04 | ||
| Fwd PE | 24.15 |
4.2 Price Multiples
73.97% of the companies in the same industry are cheaper than IBM, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit more expensive than 61.64% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.15 | ||
| EV/EBITDA | 21 |
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)2.43
PEG (5Y)N/A
EPS Next 2Y9.01%
EPS Next 3Y7.8%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.31%. Purely for dividend investing, there may be better candidates out there.
IBM's Dividend Yield is comparable with the industry average which is at 3.92.
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 | 2.31% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.81%.
Dividend Growth(5Y)0.81%
Div Incr Years6
Div Non Decr Years6
5.3 Sustainability
IBM pays out 78.75% of its income as dividend. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP78.75%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
FRA:IBM (11/21/2025, 7:00:00 PM)
257.4
+2.25 (+0.88%)
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 Cap240.60B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts70.37
Price Target246.32 (-4.3%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.31% |
Yearly Dividend5.8
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.08%
Min EPS beat(2)4.89%
Max EPS beat(2)7.28%
EPS beat(4)4
Avg EPS beat(4)7.18%
Min EPS beat(4)3.59%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.75%
EPS beat(12)11
Avg EPS beat(12)5.17%
EPS beat(16)15
Avg EPS beat(16)4.03%
Revenue beat(2)2
Avg Revenue beat(2)0.92%
Min Revenue beat(2)0.5%
Max Revenue beat(2)1.34%
Revenue beat(4)3
Avg Revenue beat(4)0.23%
Min Revenue beat(4)-0.93%
Max Revenue beat(4)1.34%
Revenue beat(8)3
Avg Revenue beat(8)-0.35%
Revenue beat(12)4
Avg Revenue beat(12)-0.51%
Revenue beat(16)8
Avg Revenue beat(16)0.23%
PT rev (1m)2.32%
PT rev (3m)2.88%
EPS NQ rev (1m)0.07%
EPS NQ rev (3m)0%
EPS NY rev (1m)2.13%
EPS NY rev (3m)4.28%
Revenue NQ rev (1m)0.34%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)0.46%
Revenue NY rev (3m)0.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.04 | ||
| Fwd PE | 24.15 | ||
| P/S | 4.24 | ||
| P/FCF | 23.15 | ||
| P/OCF | 20.56 | ||
| P/B | 9.93 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21 |
EPS(TTM)9.52
EY3.7%
EPS(NY)10.66
Fwd EY4.14%
FCF(TTM)11.12
FCFY4.32%
OCF(TTM)12.52
OCFY4.86%
SpS60.74
BVpS25.91
TBVpS-47.57
PEG (NY)2.43
PEG (5Y)N/A
Graham Number74.5
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.4% | ||
| ROE | 28.34% | ||
| ROCE | 9.45% | ||
| ROIC | 8.07% | ||
| ROICexc | 9.31% | ||
| ROICexgc | 52.18% | ||
| OM | 16.06% | ||
| PM (TTM) | 12.09% | ||
| GM | 57.81% | ||
| FCFM | 18.31% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.07%
ROIC(5y)6.14%
ROICexc(3y)8.07%
ROICexc(5y)6.94%
ROICexgc(3y)39.64%
ROICexgc(5y)31.12%
ROCE(3y)8.28%
ROCE(5y)7.2%
ROICexgc growth 3Y23.43%
ROICexgc growth 5Y15.29%
ROICexc growth 3Y14.68%
ROICexc growth 5Y5.67%
OM growth 3Y10.6%
OM growth 5Y0.28%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
F-Score6
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Debt/EBITDA | 3.6 | ||
| Cap/Depr | 31.23% | ||
| Cap/Sales | 2.31% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.87% | ||
| Profit Quality | 151.41% | ||
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 | ||
| Altman-Z | 3.52 |
F-Score6
WACC8.4%
ROIC/WACC0.96
Cap/Depr(3y)39.45%
Cap/Depr(5y)41.95%
Cap/Sales(3y)2.96%
Cap/Sales(5y)3.91%
Profit Quality(3y)291.08%
Profit Quality(5y)263.12%
High Growth Momentum
Growth
EPS 1Y (TTM)6.71%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.22%
EPS Next Y11.14%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
EPS Next 5Y6.07%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
Revenue Next Year6.83%
Revenue Next 2Y5.65%
Revenue Next 3Y5.19%
Revenue Next 5Y5.12%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
EBIT Next 5Y17.21%
FCF growth 1Y3.97%
FCF growth 3Y5.46%
FCF growth 5Y-0.17%
OCF growth 1Y0.37%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%
INTL BUSINESS MACHINES CORP / IBM.DE FAQ
What is the fundamental rating for IBM stock?
ChartMill assigns a fundamental rating of 4 / 10 to IBM.DE.
What is the valuation status for IBM stock?
ChartMill assigns a valuation rating of 2 / 10 to INTL BUSINESS MACHINES CORP (IBM.DE). This can be considered as Overvalued.
How profitable is INTL BUSINESS MACHINES CORP (IBM.DE) stock?
INTL BUSINESS MACHINES CORP (IBM.DE) has a profitability rating of 7 / 10.
How financially healthy is INTL BUSINESS MACHINES CORP?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM.DE) is 3 / 10.
Is the dividend of INTL BUSINESS MACHINES CORP sustainable?
The dividend rating of INTL BUSINESS MACHINES CORP (IBM.DE) is 4 / 10 and the dividend payout ratio is 78.75%.