INTL BUSINESS MACHINES CORP (IBM)
US4592001014 - Common Stock
Overall IBM gets a fundamental rating of 5 out of 10. We evaluated IBM against 84 industry peers in the IT Services industry. IBM scores excellent on profitability, but there are concerns on its financial health. IBM is not valued too expensively and it also shows 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.
IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
IBM's Return On Assets of 4.76% is fine compared to the rest of the industry. IBM outperforms 62.20% of its industry peers.
Looking at the Return On Equity, with a value of 26.17%, IBM belongs to the top of the industry, outperforming 87.80% of the companies in the same industry.
IBM has a better Return On Invested Capital (7.33%) than 67.07% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is below the industry average of 9.95%.
The last Return On Invested Capital (7.33%) for IBM is above the 3 year average (6.36%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 26.17% | ||
| ROIC | 7.33% |
ROA(3y)3.73%
ROA(5y)4.19%
ROE(3y)23.72%
ROE(5y)28.71%
ROIC(3y)6.36%
ROIC(5y)5.87%
1.3 Margins
IBM's Profit Margin of 10.22% is fine compared to the rest of the industry. IBM outperforms 74.39% of its industry peers.
In the last couple of years the Profit Margin of IBM has grown nicely.
Looking at the Operating Margin, with a value of 14.48%, IBM belongs to the top of the industry, outperforming 82.93% of the companies in the same industry.
In the last couple of years the Operating Margin of IBM has declined.
With a decent Gross Margin value of 56.53%, IBM is doing good in the industry, outperforming 78.05% of the companies in the same industry.
In the last couple of years the Gross Margin of IBM has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.48% | ||
| PM (TTM) | 10.22% | ||
| GM | 56.53% |
OM growth 3Y10.99%
OM growth 5Y-4.17%
PM growth 3Y6.18%
PM growth 5Y2.03%
GM growth 3Y-0.29%
GM growth 5Y3.62%
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.
Compared to 5 years ago, IBM has more shares outstanding
Compared to 1 year ago, IBM has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 3.39 indicates that IBM is not in any danger for bankruptcy at the moment.
IBM has a Altman-Z score (3.39) which is in line with its industry peers.
The Debt to FCF ratio of IBM is 4.76, which is a neutral value as it means it would take IBM, 4.76 years of fcf income to pay off all of its debts.
IBM has a Debt to FCF ratio (4.76) which is comparable to the rest of the industry.
IBM has a Debt/Equity ratio of 2.17. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 2.17, IBM is not doing good in the industry: 82.93% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.17 | ||
| Debt/FCF | 4.76 | ||
| Altman-Z | 3.39 |
ROIC/WACC0.71
WACC10.27%
2.3 Liquidity
IBM has a Current Ratio of 1.06. This is a normal value and indicates that IBM is financially healthy and should not expect problems in meeting its short term obligations.
IBM's Current ratio of 1.06 is on the low side compared to the rest of the industry. IBM is outperformed by 74.39% of its industry peers.
IBM has a Quick Ratio of 1.01. This is a normal value and indicates that IBM is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of IBM (1.01) is worse than 76.83% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.01 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 10.06% over the past year.
The Earnings Per Share has been decreasing by -7.01% on average over the past years.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 2.31% in the last year.
Measured over the past years, IBM shows a decrease in Revenue. The Revenue has been decreasing by -4.92% on average per year.
EPS 1Y (TTM)10.06%
EPS 3Y3.49%
EPS 5Y-7.01%
EPS Q2Q%4.55%
Revenue 1Y (TTM)2.31%
Revenue growth 3Y3.88%
Revenue growth 5Y-4.92%
Sales Q2Q%1.46%
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 5.61% on average per year.
Based on estimates for the next years, IBM will show a small growth in Revenue. The Revenue will grow by 3.85% on average per year.
EPS Next Y7.77%
EPS Next 2Y5.62%
EPS Next 3Y5.11%
EPS Next 5Y5.61%
Revenue Next Year1.7%
Revenue Next 2Y3.25%
Revenue Next 3Y3.47%
Revenue Next 5Y3.85%
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
With a Price/Earnings ratio of 21.69, IBM is valued on the expensive side.
Based on the Price/Earnings ratio, IBM is valued a bit cheaper than 67.07% of the companies in the same industry.
IBM is valuated rather cheaply when we compare the Price/Earnings ratio to 29.20, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 20.80, IBM is valued on the expensive side.
Based on the Price/Forward Earnings ratio, IBM is valued a bit cheaper than the industry average as 69.51% of the companies are valued more expensively.
IBM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 24.00, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.69 | ||
| Fwd PE | 20.8 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. IBM is cheaper than 62.20% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit cheaper than the industry average as 79.27% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.34 | ||
| EV/EBITDA | 18.02 |
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)2.79
PEG (5Y)N/A
EPS Next 2Y5.62%
EPS Next 3Y5.11%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 3.20%. Purely for dividend investing, there may be better candidates out there.
IBM's Dividend Yield is rather good when compared to the industry average which is at 2.85. IBM pays more dividend than 96.34% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.23, IBM pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.2% |
5.2 History
The dividend of IBM has a limited annual growth rate of 1.21%.
IBM has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of IBM decreased recently.
Dividend Growth(5Y)1.21%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
95.65% 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.
DP95.65%
EPS Next 2Y5.62%
EPS Next 3Y5.11%
INTL BUSINESS MACHINES CORP
NYSE:IBM (11/22/2024, 7:43:39 PM)
After market: 223.1 +0.13 (+0.06%)222.97
+0.57 (+0.26%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap206.17B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.2% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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Revenue beat(2)
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PT rev (1m)
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EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.69 | ||
| Fwd PE | 20.8 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)2.79
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 26.17% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 14.48% | ||
| PM (TTM) | 10.22% | ||
| GM | 56.53% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.47
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.17 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.01 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)10.06%
EPS 3Y3.49%
EPS 5Y
EPS Q2Q%
EPS Next Y7.77%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)2.31%
Revenue growth 3Y3.88%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y