INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA • New York Stock Exchange • NYSE:IBM • US4592001014
294.31 USD
-20.42 (-6.49%)
At close: Feb 3, 2026
294.49 USD
+0.18 (+0.06%)
Pre-Market: 2/4/2026, 5:17:02 AM
We assign a fundamental rating of 5 out of 10 to IBM. IBM was compared to 88 industry peers in the IT Services industry. IBM scores excellent on profitability, but 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
- IBM had positive earnings in the past year.
- IBM had a positive operating cash flow in the past year.
- In the past 5 years IBM has always been profitable.
- In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
- IBM has a better Return On Assets (6.97%) than 75.00% of its industry peers.
- IBM has a better Return On Equity (32.45%) than 90.91% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 7.68%, IBM is in the better half of the industry, outperforming 70.45% 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 29.07%.
- The last Return On Invested Capital (7.68%) for IBM is above the 3 year average (7.08%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.97% | ||
| ROE | 32.45% | ||
| ROIC | 7.68% |
ROA(3y)5.64%
ROA(5y)4.51%
ROE(3y)29.27%
ROE(5y)25.13%
ROIC(3y)7.08%
ROIC(5y)6.41%
1.3 Margins
- IBM's Profit Margin of 15.69% is amongst the best of the industry. IBM outperforms 90.91% of its industry peers.
- In the last couple of years the Profit Margin of IBM has grown nicely.
- IBM has a Operating Margin of 16.30%. This is amongst the best in the industry. IBM outperforms 87.50% of its industry peers.
- IBM's Operating Margin has improved in the last couple of years.
- The Gross Margin of IBM (58.19%) is better than 79.55% of its industry peers.
- IBM's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.3% | ||
| PM (TTM) | 15.69% | ||
| GM | 58.19% |
OM growth 3Y10.55%
OM growth 5Y8.93%
PM growth 3Y79.59%
PM growth 5Y9.14%
GM growth 3Y2.52%
GM growth 5Y0.79%
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
- The number of shares outstanding for IBM has been increased compared to 5 years ago.
- IBM has a worse debt/assets ratio than last year.
2.2 Solvency
- IBM has an Altman-Z score of 3.49. 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 3.49, IBM is in the better half of the industry, outperforming 62.50% of the companies in the same industry.
- IBM has a debt to FCF ratio of 5.29. This is a neutral value as IBM would need 5.29 years to pay back of all of its debts.
- IBM has a Debt to FCF ratio (5.29) which is comparable to the rest of the industry.
- IBM has a Debt/Equity ratio of 1.68. This is a high value indicating a heavy dependency on external financing.
- IBM has a Debt to Equity ratio of 1.68. This is in the lower half of the industry: IBM underperforms 72.73% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.68 | ||
| Debt/FCF | 5.29 | ||
| Altman-Z | 3.49 |
ROIC/WACC0.85
WACC9.03%
2.3 Liquidity
- A Current Ratio of 0.96 indicates that IBM may have some problems paying its short term obligations.
- IBM's Current ratio of 0.96 is on the low side compared to the rest of the industry. IBM is outperformed by 79.55% of its industry peers.
- IBM has a Quick Ratio of 0.96. This is a bad value and indicates that IBM is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Quick ratio of IBM (0.92) is worse than 80.68% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.96 | ||
| Quick Ratio | 0.92 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an nice 12.00% over the past year.
- Measured over the past 5 years, IBM shows a small growth in Earnings Per Share. The EPS has been growing by 5.94% on average per year.
- IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 7.62%.
- IBM shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 4.12% yearly.
EPS 1Y (TTM)12%
EPS 3Y8.25%
EPS 5Y5.94%
EPS Q2Q%15.31%
Revenue 1Y (TTM)7.62%
Revenue growth 3Y3.72%
Revenue growth 5Y4.12%
Sales Q2Q%12.15%
3.2 Future
- The Earnings Per Share is expected to grow by 5.64% 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 4.79% on average per year.
EPS Next Y8.56%
EPS Next 2Y8.43%
EPS Next 3Y9.11%
EPS Next 5Y5.64%
Revenue Next Year6.14%
Revenue Next 2Y5.37%
Revenue Next 3Y5.33%
Revenue Next 5Y4.79%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 25.44, IBM can be considered very expensive at the moment.
- IBM's Price/Earnings is on the same level as the industry average.
- The average S&P500 Price/Earnings ratio is at 28.18. IBM is around the same levels.
- IBM is valuated rather expensively with a Price/Forward Earnings ratio of 23.43.
- IBM's Price/Forward Earnings is on the same level as the industry average.
- The average S&P500 Price/Forward Earnings ratio is at 25.51. IBM is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.44 | ||
| Fwd PE | 23.43 |
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.
- The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.76 | ||
| EV/EBITDA | 20.03 |
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 excellent profitability rating of IBM may justify a higher PE ratio.
PEG (NY)2.97
PEG (5Y)4.28
EPS Next 2Y8.43%
EPS Next 3Y9.11%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 2.28%, IBM has a reasonable but not impressive dividend return.
- Compared to an average industry Dividend Yield of 0.45, IBM pays a better dividend. On top of this IBM pays more dividend than 92.05% of the companies listed in the same industry.
- IBM's Dividend Yield is a higher than the S&P500 average which is at 1.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.28% |
5.2 History
- The dividend of IBM has a limited annual growth rate of 0.63%.
- IBM has paid a dividend for at least 10 years, which is a reliable track record.
- IBM has decreased its dividend in the last 3 years.
Dividend Growth(5Y)0.63%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
- 59.05% of the earnings are spent on dividend by IBM. This is a bit on the high side, but may be sustainable.
- The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP59.05%
EPS Next 2Y8.43%
EPS Next 3Y9.11%
294.31
-20.42 (-6.49%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)01-28 2026-01-28/amc
Earnings (Next)04-21 2026-04-21/amc
Inst Owners64.18%
Inst Owner Change-1.57%
Ins Owners0.09%
Ins Owner Change-1.55%
Market Cap275.10B
Revenue(TTM)67.53B
Net Income(TTM)10.59B
Analysts71.85
Price Target319.58 (8.59%)
Short Float %2.13%
Short Ratio4.87
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.28% |
Yearly Dividend6.72
Dividend Growth(5Y)0.63%
DP59.05%
Div Incr Years2
Div Non Decr Years2
Ex-Date02-10 2026-02-10 (1.68)
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.44%
Min EPS beat(2)3.6%
Max EPS beat(2)7.28%
EPS beat(4)4
Avg EPS beat(4)7.19%
Min EPS beat(4)3.6%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)6.03%
EPS beat(12)12
Avg EPS beat(12)5.55%
EPS beat(16)15
Avg EPS beat(16)4.22%
Revenue beat(2)2
Avg Revenue beat(2)0.94%
Min Revenue beat(2)0.5%
Max Revenue beat(2)1.37%
Revenue beat(4)4
Avg Revenue beat(4)0.81%
Min Revenue beat(4)0.01%
Max Revenue beat(4)1.37%
Revenue beat(8)4
Avg Revenue beat(8)-0.12%
Revenue beat(12)4
Avg Revenue beat(12)-0.46%
Revenue beat(16)8
Avg Revenue beat(16)0.09%
PT rev (1m)2.26%
PT rev (3m)4.66%
EPS NQ rev (1m)-0.93%
EPS NQ rev (3m)-1.15%
EPS NY rev (1m)0.02%
EPS NY rev (3m)2.43%
Revenue NQ rev (1m)-0.19%
Revenue NQ rev (3m)-0.11%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)0.62%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.44 | ||
| Fwd PE | 23.43 | ||
| P/S | 4.07 | ||
| P/FCF | 23.76 | ||
| P/OCF | 20.85 | ||
| P/B | 8.43 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.03 |
EPS(TTM)11.57
EY3.93%
EPS(NY)12.56
Fwd EY4.27%
FCF(TTM)12.38
FCFY4.21%
OCF(TTM)14.11
OCFY4.8%
SpS72.25
BVpS34.93
TBVpS-49.7
PEG (NY)2.97
PEG (5Y)4.28
Graham Number95.35
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.97% | ||
| ROE | 32.45% | ||
| ROCE | 9.72% | ||
| ROIC | 7.68% | ||
| ROICexc | 8.8% | ||
| ROICexgc | 44.15% | ||
| OM | 16.3% | ||
| PM (TTM) | 15.69% | ||
| GM | 58.19% | ||
| FCFM | 17.14% |
ROA(3y)5.64%
ROA(5y)4.51%
ROE(3y)29.27%
ROE(5y)25.13%
ROIC(3y)7.08%
ROIC(5y)6.41%
ROICexc(3y)8.17%
ROICexc(5y)7.26%
ROICexgc(3y)41.61%
ROICexgc(5y)34.84%
ROCE(3y)8.97%
ROCE(5y)8.11%
ROICexgc growth 3Y15%
ROICexgc growth 5Y27.2%
ROICexc growth 3Y9.9%
ROICexc growth 5Y14.25%
OM growth 3Y10.55%
OM growth 5Y8.93%
PM growth 3Y79.59%
PM growth 5Y9.14%
GM growth 3Y2.52%
GM growth 5Y0.79%
F-Score6
Asset Turnover0.44
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.68 | ||
| Debt/FCF | 5.29 | ||
| Debt/EBITDA | 3.42 | ||
| Cap/Depr | 32.2% | ||
| Cap/Sales | 2.39% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 82.3% | ||
| Profit Quality | 109.28% | ||
| Current Ratio | 0.96 | ||
| Quick Ratio | 0.92 | ||
| Altman-Z | 3.49 |
F-Score6
WACC9.03%
ROIC/WACC0.85
Cap/Depr(3y)36.49%
Cap/Depr(5y)38.74%
Cap/Sales(3y)2.67%
Cap/Sales(5y)3.22%
Profit Quality(3y)155.37%
Profit Quality(5y)231.43%
High Growth Momentum
Growth
EPS 1Y (TTM)12%
EPS 3Y8.25%
EPS 5Y5.94%
EPS Q2Q%15.31%
EPS Next Y8.56%
EPS Next 2Y8.43%
EPS Next 3Y9.11%
EPS Next 5Y5.64%
Revenue 1Y (TTM)7.62%
Revenue growth 3Y3.72%
Revenue growth 5Y4.12%
Sales Q2Q%12.15%
Revenue Next Year6.14%
Revenue Next 2Y5.37%
Revenue Next 3Y5.33%
Revenue Next 5Y4.79%
EBIT growth 1Y20.21%
EBIT growth 3Y14.66%
EBIT growth 5Y13.42%
EBIT Next Year45.85%
EBIT Next 3Y16.75%
EBIT Next 5Y13.5%
FCF growth 1Y-1.57%
FCF growth 3Y11%
FCF growth 5Y-5.01%
OCF growth 1Y-1.88%
OCF growth 3Y8.13%
OCF growth 5Y-6.23%
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 of INTL BUSINESS MACHINES CORP (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 8 / 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 25.44 and the Price/Book (PB) ratio is 8.43.
Can you provide the financial health for IBM stock?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM) is 2 / 10.