INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - NYSE:IBM - US4592001014 - Common Stock
253.44 USD
-3.57 (-1.39%)
254.25 USD
+0.81 (+0.32%)
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 86 industry peers in the IT Services industry. While IBM belongs to the best of the industry regarding profitability, there are concerns on its financial health. IBM is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year IBM was profitable.
IBM had a positive operating cash flow in the past year.
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
Looking at the Return On Assets, with a value of 3.93%, IBM is in the better half of the industry, outperforming 65.12% of the companies in the same industry.
IBM has a better Return On Equity (21.20%) than 86.05% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.55%, IBM is in the better half of the industry, outperforming 67.44% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is significantly below the industry average of 21.79%.
The last Return On Invested Capital (7.55%) for IBM is above the 3 year average (7.26%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 21.2% | ||
| ROIC | 7.55% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.26%
ROIC(5y)6.26%
1.3 Margins
The Profit Margin of IBM (9.11%) is better than 76.74% of its industry peers.
In the last couple of years the Profit Margin of IBM has declined.
IBM has a better Operating Margin (15.32%) than 81.40% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 57.57%, IBM is in the better half of the industry, outperforming 77.91% of the companies in the same industry.
IBM's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.32% | ||
| PM (TTM) | 9.11% | ||
| GM | 57.57% |
OM growth 3Y13.36%
OM growth 5Y1.77%
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.
The number of shares outstanding for IBM has been increased compared to 1 year ago.
IBM has more shares outstanding than it did 5 years ago.
IBM has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.22 indicates that IBM is not in any danger for bankruptcy at the moment.
IBM has a Altman-Z score (3.22) which is in line with its industry peers.
The Debt to FCF ratio of IBM is 5.46, which is a neutral value as it means it would take IBM, 5.46 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 5.46, IBM perfoms like the industry average, outperforming 55.81% of the companies in the same industry.
IBM has a Debt/Equity ratio of 2.01. This is a high value indicating a heavy dependency on external financing.
IBM has a Debt to Equity ratio of 2.01. This is in the lower half of the industry: IBM underperforms 77.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.22 |
ROIC/WACC0.84
WACC9.03%
2.3 Liquidity
A Current Ratio of 0.91 indicates that IBM may have some problems paying its short term obligations.
With a Current ratio value of 0.91, IBM is not doing good in the industry: 81.40% of the companies in the same industry are doing better.
A Quick Ratio of 0.87 indicates that IBM may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.87, IBM is doing worse than 81.40% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 4.32%.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.21% yearly.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 2.69% in the last year.
IBM shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.69% yearly.
EPS 1Y (TTM)4.32%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.23%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
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 6.21% on average per year.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.94% yearly.
EPS Next Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
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.
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
IBM is valuated rather expensively with a Price/Earnings ratio of 23.86.
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 (27.30), we can say IBM is valued inline with the index average.
IBM is valuated rather expensively with a Price/Forward Earnings ratio of 21.15.
Compared to the rest of the industry, the Price/Forward Earnings ratio of IBM is on the same level as its industry peers.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (22.73), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.86 | ||
| Fwd PE | 21.15 |
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.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of IBM indicates a somewhat cheap valuation: IBM is cheaper than 69.77% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.08 | ||
| EV/EBITDA | 19.22 |
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)2.75
PEG (5Y)N/A
EPS Next 2Y7.71%
EPS Next 3Y6.93%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.61%.
Compared to an average industry Dividend Yield of 2.36, IBM pays a better dividend. On top of this IBM pays more dividend than 95.35% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.38, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.83%.
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)0.83%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
IBM pays out 106.31% 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.
DP106.31%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
253.44
-3.57 (-1.39%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.2%
Inst Owner Change-1.18%
Ins Owners0.09%
Ins Owner Change0.85%
Market Cap236.08B
Analysts70
Price Target280.34 (10.61%)
Short Float %1.58%
Short Ratio3.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
Yearly Dividend6.68
Dividend Growth(5Y)0.83%
DP106.31%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.93%
Min EPS beat(2)4.89%
Max EPS beat(2)12.97%
EPS beat(4)4
Avg EPS beat(4)5.93%
Min EPS beat(4)2.27%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.15%
EPS beat(12)11
Avg EPS beat(12)4.65%
EPS beat(16)14
Avg EPS beat(16)3.57%
Revenue beat(2)2
Avg Revenue beat(2)0.68%
Min Revenue beat(2)0.01%
Max Revenue beat(2)1.34%
Revenue beat(4)2
Avg Revenue beat(4)-0.31%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)1.34%
Revenue beat(8)2
Avg Revenue beat(8)-0.52%
Revenue beat(12)4
Avg Revenue beat(12)-0.27%
Revenue beat(16)7
Avg Revenue beat(16)-1.44%
PT rev (1m)0.37%
PT rev (3m)9.73%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.1%
EPS NY rev (1m)1.96%
EPS NY rev (3m)1.68%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.25%
Revenue NY rev (1m)0.3%
Revenue NY rev (3m)0.98%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.86 | ||
| Fwd PE | 21.15 | ||
| P/S | 3.69 | ||
| P/FCF | 20.08 | ||
| P/OCF | 17.77 | ||
| P/B | 8.58 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.22 |
EPS(TTM)10.62
EY4.19%
EPS(NY)11.99
Fwd EY4.73%
FCF(TTM)12.62
FCFY4.98%
OCF(TTM)14.26
OCFY5.63%
SpS68.75
BVpS29.53
TBVpS-56.09
PEG (NY)2.75
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 21.2% | ||
| ROCE | 8.85% | ||
| ROIC | 7.55% | ||
| ROICexc | 8.78% | ||
| ROICexgc | 53.5% | ||
| OM | 15.32% | ||
| PM (TTM) | 9.11% | ||
| GM | 57.57% | ||
| FCFM | 18.36% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.26%
ROIC(5y)6.26%
ROICexc(3y)8.29%
ROICexc(5y)7.07%
ROICexgc(3y)40.75%
ROICexgc(5y)31.79%
ROCE(3y)8.5%
ROCE(5y)7.33%
ROICexcg growth 3Y26.58%
ROICexcg growth 5Y17.04%
ROICexc growth 3Y17.55%
ROICexc growth 5Y7.25%
OM growth 3Y13.36%
OM growth 5Y1.77%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
F-Score5
Asset Turnover0.43
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Debt/EBITDA | 3.77 | ||
| Cap/Depr | 31.62% | ||
| Cap/Sales | 2.38% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 90.78% | ||
| Profit Quality | 201.58% | ||
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 3.22 |
F-Score5
WACC9.03%
ROIC/WACC0.84
Cap/Depr(3y)35.46%
Cap/Depr(5y)39.55%
Cap/Sales(3y)2.66%
Cap/Sales(5y)3.73%
Profit Quality(3y)294.17%
Profit Quality(5y)264.98%
High Growth Momentum
Growth
EPS 1Y (TTM)4.32%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.23%
EPS Next Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.78%
EBIT Next 3Y26.23%
EBIT Next 5Y19.31%
FCF growth 1Y14.17%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y8.18%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%