INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:IBM - US4592001014 - Common Stock
309.24 USD
-1.5 (-0.48%)
309.24 USD
0 (0%)
Overall IBM gets a fundamental rating of 4 out of 10. We evaluated IBM against 85 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.
IBM had a positive operating cash flow in the past year.
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
IBM has a Return On Assets of 5.40%. This is in the better half of the industry: IBM outperforms 68.24% of its industry peers.
IBM has a better Return On Equity (28.34%) than 89.41% of its industry peers.
The Return On Invested Capital of IBM (8.07%) is better than 69.41% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is significantly below the industry average of 29.59%.
The 3 year average ROIC (7.07%) for IBM is below the current ROIC(8.07%), indicating increased profibility in the last year.
| 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
The Profit Margin of IBM (12.09%) is better than 83.53% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 16.06%, IBM belongs to the best of the industry, outperforming 83.53% 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.
IBM has a Gross Margin of 57.81%. This is in the better half of the industry: IBM outperforms 78.82% 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 | 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), IBM 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
IBM has an Altman-Z score of 3.59. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM has a Altman-Z score of 3.59. This is in the better half of the industry: IBM outperforms 61.18% of its industry peers.
IBM has a debt to FCF ratio of 5.27. This is a neutral value as IBM would need 5.27 years to pay back of all of its debts.
IBM has a Debt to FCF ratio (5.27) which is comparable to the rest of the industry.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
IBM has a worse Debt to Equity ratio (1.98) than 77.65% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.59 |
ROIC/WACC0.95
WACC8.5%
2.3 Liquidity
IBM has a Current Ratio of 0.93. 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 0.93. This is amonst the worse of the industry: IBM underperforms 82.35% of its industry peers.
IBM has a Quick Ratio of 0.93. This is a bad value and indicates that IBM is not financially healthy enough and could expect problems in meeting its short term obligations.
The Quick ratio of IBM (0.89) is worse than 83.53% 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.
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 4.51%.
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)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
The Earnings Per Share is expected to grow by 6.07% on average over the next years.
The Revenue is expected to grow by 5.12% on average over the next years.
EPS Next Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
EPS Next 5Y6.07%
Revenue Next Year6.83%
Revenue Next 2Y5.7%
Revenue Next 3Y5.23%
Revenue Next 5Y5.12%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
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 28.19, IBM can be considered very expensive at the moment.
IBM's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of IBM to the average of the S&P500 Index (26.54), we can say IBM is valued inline with the index average.
The Price/Forward Earnings ratio is 25.11, which means the current valuation is very expensive for IBM.
Compared to the rest of the industry, the Price/Forward Earnings ratio of IBM is on the same level as its industry peers.
IBM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 23.78, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.19 | ||
| Fwd PE | 25.11 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as IBM.
IBM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.14 | ||
| EV/EBITDA | 21.86 |
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)2.54
PEG (5Y)N/A
EPS Next 2Y9.19%
EPS Next 3Y8.11%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.18%.
Compared to an average industry Dividend Yield of 1.77, IBM pays a better dividend. On top of this IBM pays more dividend than 91.76% of the companies listed in the same industry.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.27.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.18% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.81%.
IBM has been paying a dividend for at least 10 years, so it has a reliable track record.
IBM has decreased its dividend in the last 3 years.
Dividend Growth(5Y)0.81%
Div Incr Years2
Div Non Decr Years2
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 2Y9.19%
EPS Next 3Y8.11%
309.24
-1.5 (-0.48%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners64.13%
Inst Owner Change-0.36%
Ins Owners0.09%
Ins Owner Change-0.73%
Market Cap289.06B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price Target291.37 (-5.78%)
Short Float %1.99%
Short Ratio3.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.18% |
Yearly Dividend6.68
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years2
Div Non Decr Years2
Ex-Date
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)1.8%
PT rev (3m)3.93%
EPS NQ rev (1m)0.04%
EPS NQ rev (3m)0%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)2.25%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.19 | ||
| Fwd PE | 25.11 | ||
| P/S | 4.42 | ||
| P/FCF | 24.14 | ||
| P/OCF | 21.44 | ||
| P/B | 10.36 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.86 |
EPS(TTM)10.97
EY3.55%
EPS(NY)12.32
Fwd EY3.98%
FCF(TTM)12.81
FCFY4.14%
OCF(TTM)14.42
OCFY4.66%
SpS69.97
BVpS29.85
TBVpS-54.8
PEG (NY)2.54
PEG (5Y)N/A
Graham Number85.84
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 | 3.59 |
F-Score6
WACC8.5%
ROIC/WACC0.95
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 Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
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 2Y5.7%
Revenue Next 3Y5.23%
Revenue Next 5Y5.12%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year73.84%
EBIT Next 3Y24.02%
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 FAQ
What is the fundamental rating for IBM stock?
ChartMill assigns a fundamental rating of 4 / 10 to IBM.
What is the valuation status for IBM stock?
ChartMill assigns a valuation rating of 2 / 10 to INTL BUSINESS MACHINES CORP (IBM). This can be considered as Overvalued.
How profitable is INTL BUSINESS MACHINES CORP (IBM) stock?
INTL BUSINESS MACHINES CORP (IBM) 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) is 3 / 10.
Is the dividend of INTL BUSINESS MACHINES CORP sustainable?
The dividend rating of INTL BUSINESS MACHINES CORP (IBM) is 5 / 10 and the dividend payout ratio is 78.75%.