INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:IBM - US4592001014 - Common Stock
304.22 USD
+1.5 (+0.5%)
304 USD
-0.22 (-0.07%)
Overall IBM gets a fundamental rating of 4 out of 10. We evaluated IBM against 88 industry peers in the IT Services industry. IBM scores excellent on profitability, 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.
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
IBM's Return On Assets of 5.40% is fine compared to the rest of the industry. IBM outperforms 69.32% of its industry peers.
Looking at the Return On Equity, with a value of 28.34%, IBM belongs to the top of the industry, outperforming 89.77% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 8.07%, IBM is in the better half of the industry, outperforming 70.45% of the companies in the same industry.
IBM had an Average Return On Invested Capital over the past 3 years of 7.07%. This is significantly below the industry average of 28.99%.
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
IBM has a better Profit Margin (12.09%) than 84.09% 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 84.09% of the companies in the same industry.
IBM's Operating Margin has been stable in the last couple of years.
IBM has a Gross Margin of 57.81%. This is in the better half of the industry: IBM outperforms 79.55% 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.
Compared to 1 year ago, IBM has more shares outstanding
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
IBM has an Altman-Z score of 3.55. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM's Altman-Z score of 3.55 is in line compared to the rest of the industry. IBM outperforms 59.09% 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.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
IBM has a Debt to Equity ratio of 1.98. This is in the lower half of the industry: IBM underperforms 73.86% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.55 |
ROIC/WACC0.92
WACC8.77%
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's Current ratio of 0.93 is on the low side compared to the rest of the industry. IBM is outperformed by 80.68% 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.
IBM has a Quick ratio of 0.89. This is amonst the worse of the industry: IBM underperforms 81.82% 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.
Measured over the past years, IBM shows a decrease in Earnings Per Share. The EPS has been decreasing by -4.21% on average per year.
IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 4.51%.
The Revenue has been growing slightly by 1.69% on average over the past years.
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.
Based on estimates for the next years, IBM will show a small growth in Revenue. The Revenue will grow by 5.12% on average per year.
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
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
The Price/Earnings ratio is 27.73, which means the current valuation is very expensive for IBM.
Compared to the rest of the industry, the Price/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/Earnings ratio to 27.19, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 24.70 indicates a rather expensive valuation of IBM.
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 23.88, IBM is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.73 | ||
| Fwd PE | 24.7 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of IBM is on the same level as its industry peers.
IBM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.75 | ||
| EV/EBITDA | 21.37 |
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)2.5
PEG (5Y)N/A
EPS Next 2Y9.19%
EPS Next 3Y8.11%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.22%, IBM has a reasonable but not impressive dividend return.
IBM's Dividend Yield is rather good when compared to the industry average which is at 0.44. IBM pays more dividend than 92.05% of the companies in the same industry.
IBM's Dividend Yield is comparable with the S&P500 average which is at 1.94.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.22% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.81%.
IBM has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of IBM decreased in the last 3 years.
Dividend Growth(5Y)0.81%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
78.75% 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.
DP78.75%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
304.22
+1.5 (+0.5%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners64.18%
Inst Owner Change0%
Ins Owners0.09%
Ins Owner Change-1.55%
Market Cap284.37B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price Target292.9 (-3.72%)
Short Float %2.12%
Short Ratio3.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.22% |
Yearly Dividend6.68
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years2
Div Non Decr Years2
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)2.34%
PT rev (3m)4.38%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.41%
EPS NY rev (1m)0%
EPS NY rev (3m)2.07%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.03%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.42%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.73 | ||
| Fwd PE | 24.7 | ||
| P/S | 4.35 | ||
| P/FCF | 23.75 | ||
| P/OCF | 21.09 | ||
| P/B | 10.19 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.37 |
EPS(TTM)10.97
EY3.61%
EPS(NY)12.32
Fwd EY4.05%
FCF(TTM)12.81
FCFY4.21%
OCF(TTM)14.42
OCFY4.74%
SpS69.97
BVpS29.85
TBVpS-54.8
PEG (NY)2.5
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 | 3.55 |
F-Score6
WACC8.77%
ROIC/WACC0.92
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 of INTL BUSINESS MACHINES CORP (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.
What are the PE and PB ratios of INTL BUSINESS MACHINES CORP (IBM) stock?
The Price/Earnings (PE) ratio for INTL BUSINESS MACHINES CORP (IBM) is 27.73 and the Price/Book (PB) ratio is 10.19.
Can you provide the financial health for IBM stock?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM) is 2 / 10.