INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:IBM - US4592001014 - Common Stock
304.56 USD
+0.78 (+0.26%)
304 USD
-0.56 (-0.18%)
Overall IBM gets a fundamental rating of 4 out of 10. We evaluated IBM against 88 industry peers in the IT Services industry. While IBM has a great profitability rating, there are quite some 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.
In the past 5 years IBM has always been profitable.
Each year in the past 5 years IBM had a positive operating cash flow.
1.2 Ratios
The Return On Assets of IBM (5.40%) is better than 69.32% of its industry peers.
The Return On Equity of IBM (28.34%) is better than 89.77% of its industry peers.
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.
The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 29.60%.
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's Profit Margin of 12.09% is amongst the best of the industry. IBM outperforms 84.09% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
IBM has a Operating Margin of 16.06%. This is amongst the best in the industry. IBM outperforms 84.09% of its industry peers.
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 78.41% of its industry peers.
IBM's Gross Margin has been stable in the last couple of years.
| 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so IBM is destroying value.
Compared to 1 year ago, IBM has more shares outstanding
Compared to 5 years ago, IBM has more shares outstanding
Compared to 1 year ago, IBM has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 3.55 indicates that IBM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.55, IBM is in the better half of the industry, outperforming 60.23% of the companies in the same industry.
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.
IBM's Debt to FCF ratio of 5.27 is in line compared to the rest of the industry. IBM outperforms 53.41% of its industry peers.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
Looking at the Debt to Equity ratio, with a value of 1.98, IBM is doing worse than 76.14% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.55 |
ROIC/WACC0.92
WACC8.78%
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 79.55% 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's Quick ratio of 0.89 is on the low side compared to the rest of the industry. IBM is outperformed by 80.68% of its industry peers.
| 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%.
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%.
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
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 Y11.1%
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.
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 27.76, IBM can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of IBM is on the same level as its industry peers.
When comparing the Price/Earnings ratio of IBM to the average of the S&P500 Index (26.59), we can say IBM is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 24.73, the valuation of IBM can be described as rather expensive.
IBM's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (24.03), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.76 | ||
| Fwd PE | 24.73 |
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 ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.78 | ||
| EV/EBITDA | 21.44 |
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
IBM has a Yearly Dividend Yield of 2.24%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 0.43, IBM pays a better dividend. On top of this IBM pays more dividend than 92.05% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 1.87, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.24% |
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 2Y9.19%
EPS Next 3Y8.11%
304.56
+0.78 (+0.26%)
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-1.27%
Market Cap284.68B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price TargetN/A
Short Float %2.1%
Short Ratio3.93
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.24% |
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 | 27.76 | ||
| Fwd PE | 24.73 | ||
| P/S | 4.35 | ||
| P/FCF | 23.78 | ||
| P/OCF | 21.11 | ||
| P/B | 10.2 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.44 |
EPS(TTM)10.97
EY3.6%
EPS(NY)12.32
Fwd EY4.04%
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
WACC8.78%
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 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%.