INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - NYSE:IBM - US4592001014 - Common Stock
306.38 USD
-6.04 (-1.93%)
307.9 USD
+1.52 (+0.5%)
Overall IBM gets a fundamental rating of 5 out of 10. We evaluated IBM against 85 industry peers in the IT Services industry. IBM scores excellent on profitability, but there are concerns on its financial health. IBM is quite expensive at the moment. 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.
Each year in the past 5 years IBM has been profitable.
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 69.41% of the companies in the same industry.
IBM's Return On Equity of 28.34% is amongst the best of the industry. IBM outperforms 92.94% of its industry peers.
IBM has a Return On Invested Capital of 8.07%. This is in the better half of the industry: IBM outperforms 68.24% of its industry peers.
The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 27.96%.
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
With an excellent Profit Margin value of 12.09%, IBM belongs to the best of the industry, outperforming 87.06% of the companies in the same industry.
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 84.71% 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.
The Gross Margin of IBM (57.81%) is better than 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.
The number of shares outstanding for IBM has been increased compared to 5 years ago.
Compared to 1 year ago, IBM has an improved debt to assets ratio.
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.
Looking at the Altman-Z score, with a value of 3.59, IBM is in the better half of the industry, outperforming 63.53% of the companies in the same industry.
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.
Looking at the Debt to FCF ratio, with a value of 5.27, IBM is in line with its industry, outperforming 55.29% of the companies in the same industry.
A Debt/Equity ratio of 1.98 is on the high side and indicates that IBM has dependencies on debt financing.
IBM has a worse Debt to Equity ratio (1.98) than 78.82% 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
A Current Ratio of 0.93 indicates that IBM may have some problems paying its short term obligations.
IBM has a worse Current ratio (0.93) than 82.35% of its industry peers.
A Quick Ratio of 0.89 indicates that IBM may have some problems paying its short term obligations.
With a Quick ratio value of 0.89, IBM is not doing good in the industry: 82.35% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.71%.
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.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 4.51% in the last year.
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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.21% yearly.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.94% yearly.
EPS Next Y8.82%
EPS Next 2Y7.9%
EPS Next 3Y7.12%
EPS Next 5Y6.21%
Revenue Next Year6.33%
Revenue Next 2Y5.38%
Revenue Next 3Y5.05%
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
A Price/Earnings ratio of 27.93 indicates a quite expensive valuation of IBM.
The rest of the industry has a similar Price/Earnings ratio as IBM.
IBM's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 25.83.
The Price/Forward Earnings ratio is 25.47, which means the current valuation is very expensive for IBM.
IBM's Price/Forward Earnings is on the same level as the industry average.
IBM's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 32.68.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.93 | ||
| Fwd PE | 25.47 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA is on the same level as the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of IBM is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.84 | ||
| EV/EBITDA | 21.9 |
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)3.17
PEG (5Y)N/A
EPS Next 2Y7.9%
EPS Next 3Y7.12%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.15%, IBM has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.58, IBM pays a better dividend. On top of this IBM pays more dividend than 90.59% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.37, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.15% |
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.
IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP78.75%
EPS Next 2Y7.9%
EPS Next 3Y7.12%
306.38
-6.04 (-1.93%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.04%
Inst Owner Change-0.54%
Ins Owners0.09%
Ins Owner Change0.85%
Market Cap285.40B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts70.37
Price Target286.2 (-6.59%)
Short Float %1.7%
Short Ratio3.08
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.15% |
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)2.09%
PT rev (3m)5.88%
EPS NQ rev (1m)-0.45%
EPS NQ rev (3m)-0.04%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)2.11%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)-0.04%
Revenue NY rev (3m)0.27%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.93 | ||
| Fwd PE | 25.47 | ||
| P/S | 4.36 | ||
| P/FCF | 23.84 | ||
| P/OCF | 21.17 | ||
| P/B | 10.23 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.9 |
EPS(TTM)10.97
EY3.58%
EPS(NY)12.03
Fwd EY3.93%
FCF(TTM)12.85
FCFY4.19%
OCF(TTM)14.47
OCFY4.72%
SpS70.21
BVpS29.96
TBVpS-54.99
PEG (NY)3.17
PEG (5Y)N/A
Graham Number85.99
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 Y8.82%
EPS Next 2Y7.9%
EPS Next 3Y7.12%
EPS Next 5Y6.21%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
Revenue Next Year6.33%
Revenue Next 2Y5.38%
Revenue Next 3Y5.05%
Revenue Next 5Y4.94%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
EBIT Next 5Y19.31%
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 5 / 10 to IBM.
What is the valuation status for IBM stock?
ChartMill assigns a valuation rating of 3 / 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%.