INTL BUSINESS MACHINES CORP (IBM)
US4592001014 - Common Stock
IBM gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 83 industry peers in the IT Services industry. IBM scores excellent on profitability, but there are concerns on its financial health. IBM has a decent growth rate and is not valued too expensively.
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.
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 64.20% of its industry peers.
IBM's Return On Equity of 26.17% is amongst the best of the industry. IBM outperforms 90.12% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.33%, IBM is in the better half of the industry, outperforming 69.14% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for IBM is below the industry average of 9.35%.
The 3 year average ROIC (6.36%) for IBM is below the current ROIC(7.33%), indicating increased profibility in the last year.
| 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 has a Profit Margin of 10.22%. This is in the better half of the industry: IBM outperforms 75.31% of its industry peers.
In the last couple of years the Profit Margin of IBM has grown nicely.
IBM has a Operating Margin of 14.48%. This is amongst the best in the industry. IBM outperforms 82.72% of its industry peers.
In the last couple of years the Operating Margin of IBM has declined.
IBM has a Gross Margin of 56.53%. This is in the better half of the industry: IBM outperforms 77.78% of its industry peers.
IBM's Gross Margin has improved in the last couple of years.
| 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
IBM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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
An Altman-Z score of 3.40 indicates that IBM is not in any danger for bankruptcy at the moment.
IBM has a Altman-Z score (3.40) which is comparable to the rest of the industry.
IBM has a debt to FCF ratio of 4.76. This is a neutral value as IBM would need 4.76 years to pay back of 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.
IBM's Debt to Equity ratio of 2.17 is on the low side compared to the rest of the industry. IBM is outperformed by 81.48% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.17 | ||
| Debt/FCF | 4.76 | ||
| Altman-Z | 3.4 |
ROIC/WACC0.65
WACC11.3%
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 75.31% 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.
Looking at the Quick ratio, with a value of 1.01, IBM is doing worse than 77.78% of the companies in the same industry.
| 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.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -7.01% yearly.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 2.31% in the last year.
IBM shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -4.92% yearly.
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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.32% yearly.
Based on estimates for the next years, IBM will show a small growth in Revenue. The Revenue will grow by 4.02% on average per year.
EPS Next Y7.4%
EPS Next 2Y6.3%
EPS Next 3Y5.68%
EPS Next 5Y5.32%
Revenue Next Year1.7%
Revenue Next 2Y3.25%
Revenue Next 3Y3.47%
Revenue Next 5Y4.02%
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 21.61, IBM is valued on the expensive side.
Based on the Price/Earnings ratio, IBM is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
IBM is valuated rather cheaply when we compare the Price/Earnings ratio to 27.55, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 20.46 indicates a rather expensive valuation of IBM.
Compared to the rest of the industry, the Price/Forward Earnings ratio of IBM indicates a somewhat cheap valuation: IBM is cheaper than 70.37% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (24.00), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.61 | ||
| Fwd PE | 20.46 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, IBM is valued a bit cheaper than 65.43% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, IBM is valued cheaply inside the industry as 80.25% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.28 | ||
| EV/EBITDA | 18.18 |
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)2.92
PEG (5Y)N/A
EPS Next 2Y6.3%
EPS Next 3Y5.68%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.98%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 2.81, IBM pays a better dividend. On top of this IBM pays more dividend than 95.06% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, IBM pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.98% |
5.2 History
The dividend of IBM has a limited annual growth rate of 1.21%.
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)1.21%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
IBM pays out 95.65% of its income as dividend. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP95.65%
EPS Next 2Y6.3%
EPS Next 3Y5.68%
INTL BUSINESS MACHINES CORP
NYSE:IBM (12/27/2024, 11:43:02 AM)
222.14
-2.75 (-1.22%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners61.42%
Inst Owner Change3.96%
Ins Owners0.08%
Ins Owner Change-0.05%
Market Cap205.40B
Analysts69.23
Price Target217.92 (-1.9%)
Short Float %2.29%
Short Ratio4.99
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.98% |
Dividend Growth(5Y)1.21%
DP95.65%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.9%
Min EPS beat(2)2.27%
Max EPS beat(2)9.54%
EPS beat(4)4
Avg EPS beat(4)4.32%
Min EPS beat(4)1.41%
Max EPS beat(4)9.54%
EPS beat(8)7
Avg EPS beat(8)4.16%
EPS beat(12)11
Avg EPS beat(12)2.98%
EPS beat(16)14
Avg EPS beat(16)3.64%
Revenue beat(2)0
Avg Revenue beat(2)-0.83%
Min Revenue beat(2)-1.66%
Max Revenue beat(2)-0.01%
Revenue beat(4)0
Avg Revenue beat(4)-0.94%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)-0.01%
Revenue beat(8)1
Avg Revenue beat(8)-0.89%
Revenue beat(12)5
Avg Revenue beat(12)0.23%
Revenue beat(16)5
Avg Revenue beat(16)-6.01%
PT rev (1m)0.48%
PT rev (3m)12.09%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.03%
EPS NY rev (1m)-0.35%
EPS NY rev (3m)0.5%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.38%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.62%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.61 | ||
| Fwd PE | 20.46 | ||
| P/S | 3.28 | ||
| P/FCF | 17.28 | ||
| P/OCF | 15.13 | ||
| P/B | 8.4 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.18 |
EPS(TTM)10.28
EY4.63%
EPS(NY)10.86
Fwd EY4.89%
FCF(TTM)12.86
FCFY5.79%
OCF(TTM)14.69
OCFY6.61%
SpS67.68
BVpS26.44
TBVpS-51.62
PEG (NY)2.92
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.76% | ||
| ROE | 26.17% | ||
| ROCE | 8.59% | ||
| ROIC | 7.33% | ||
| ROICexc | 8.43% | ||
| ROICexgc | 39.44% | ||
| OM | 14.48% | ||
| PM (TTM) | 10.22% | ||
| GM | 56.53% | ||
| FCFM | 19% |
ROA(3y)3.73%
ROA(5y)4.19%
ROE(3y)23.72%
ROE(5y)28.71%
ROIC(3y)6.36%
ROIC(5y)5.87%
ROICexc(3y)7.1%
ROICexc(5y)6.52%
ROICexgc(3y)32.98%
ROICexgc(5y)26.78%
ROCE(3y)7.45%
ROCE(5y)6.89%
ROICexcg growth 3Y48.17%
ROICexcg growth 5Y7.12%
ROICexc growth 3Y21.44%
ROICexc growth 5Y-11.37%
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%
F-Score6
Asset Turnover0.47
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.17 | ||
| Debt/FCF | 4.76 | ||
| Debt/EBITDA | 3.85 | ||
| Cap/Depr | 35.89% | ||
| Cap/Sales | 2.7% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 98.64% | ||
| Profit Quality | 185.87% | ||
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.01 | ||
| Altman-Z | 3.4 |
F-Score6
WACC11.3%
ROIC/WACC0.65
Cap/Depr(3y)41.79%
Cap/Depr(5y)44.32%
Cap/Sales(3y)3.67%
Cap/Sales(5y)4.38%
Profit Quality(3y)284.2%
Profit Quality(5y)249.23%
High Growth Momentum
Growth
EPS 1Y (TTM)10.06%
EPS 3Y3.49%
EPS 5Y-7.01%
EPS Q2Q%4.55%
EPS Next Y7.4%
EPS Next 2Y6.3%
EPS Next 3Y5.68%
EPS Next 5Y5.32%
Revenue 1Y (TTM)2.31%
Revenue growth 3Y3.88%
Revenue growth 5Y-4.92%
Sales Q2Q%1.46%
Revenue Next Year1.7%
Revenue Next 2Y3.25%
Revenue Next 3Y3.47%
Revenue Next 5Y4.02%
EBIT growth 1Y9.16%
EBIT growth 3Y15.3%
EBIT growth 5Y-8.88%
EBIT Next Year47.2%
EBIT Next 3Y17%
EBIT Next 5Y9.69%
FCF growth 1Y69.95%
FCF growth 3Y-6.79%
FCF growth 5Y1.44%
OCF growth 1Y50.66%
OCF growth 3Y-8.52%
OCF growth 5Y-1.79%