INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:IBM - US4592001014 - Common Stock
305.67 USD
+7.72 (+2.59%)
305.65 USD
-0.02 (-0.01%)
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 88 industry peers in the IT Services industry. IBM has an excellent profitability rating, 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.
- In the past year IBM had a positive cash flow from operations.
- 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's Return On Assets of 5.40% is fine compared to the rest of the industry. IBM outperforms 69.32% of its industry peers.
- IBM has a Return On Equity of 28.34%. This is amongst the best in the industry. IBM outperforms 89.77% of its industry peers.
- IBM has a better Return On Invested Capital (8.07%) than 70.45% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 28.99%.
- The last Return On Invested Capital (8.07%) for IBM is above the 3 year average (7.07%), which is a sign of increasing profitability.
| 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 has a better Profit Margin (12.09%) than 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.
- IBM's Operating Margin has been stable in the last couple of years.
- Looking at the Gross Margin, with a value of 57.81%, IBM is in the better half of the industry, outperforming 79.55% of the companies in the same industry.
- 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
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so 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
- An Altman-Z score of 3.53 indicates that IBM is not in any danger for bankruptcy at the moment.
- With a Altman-Z score value of 3.53, IBM perfoms like the industry average, outperforming 57.95% 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.
- IBM's Debt to FCF ratio of 5.27 is in line compared to the rest of the industry. IBM outperforms 52.27% of its industry peers.
- A Debt/Equity ratio of 1.98 is on the high side and indicates that IBM has dependencies on debt financing.
- The Debt to Equity ratio of IBM (1.98) is worse than 73.86% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.53 |
ROIC/WACC0.92
WACC8.74%
2.3 Liquidity
- IBM has a Current 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.
- With a Current ratio value of 0.93, IBM is not doing good in the industry: 80.68% of the companies in the same industry are doing better.
- A Quick Ratio of 0.89 indicates that IBM may have some problems paying its short term obligations.
- IBM has a worse Quick ratio (0.89) than 81.82% 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%.
- IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.21% yearly.
- The Revenue has been growing slightly by 4.51% in the past 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
- The Earnings Per Share is expected to grow by 6.07% on average over the next years.
- 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
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
- 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
- The Price/Earnings ratio is 27.86, which means the current valuation is very expensive for 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 27.47.
- IBM is valuated rather expensively with a Price/Forward Earnings ratio of 24.82.
- The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
- The average S&P500 Price/Forward Earnings ratio is at 24.26. IBM is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.86 | ||
| Fwd PE | 24.82 |
4.2 Price Multiples
- IBM's Enterprise Value to EBITDA ratio is in line with the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.87 | ||
| EV/EBITDA | 21.08 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.51
PEG (5Y)N/A
EPS Next 2Y9.19%
EPS Next 3Y8.11%
5. Dividend
5.1 Amount
- IBM has a Yearly Dividend Yield of 2.26%. Purely for dividend investing, there may be better candidates out there.
- IBM's Dividend Yield is rather good when compared to the industry average which is at 0.43. IBM pays more dividend than 92.05% of the companies in the same industry.
- IBM's Dividend Yield is a higher than the S&P500 average which is at 1.87.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.26% |
5.2 History
- The dividend of IBM has a limited annual growth rate of 0.81%.
- 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)0.81%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
- 78.75% of the earnings are spent on dividend by IBM. 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%
305.67
+7.72 (+2.59%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)10-22 2025-10-22/amc
Earnings (Next)01-28 2026-01-28/amc
Inst Owners64.18%
Inst Owner Change0%
Ins Owners0.09%
Ins Owner Change-1.55%
Market Cap285.72B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price Target299.53 (-2.01%)
Short Float %2.12%
Short Ratio3.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.26% |
Yearly Dividend6.68
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years2
Div Non Decr Years2
Ex-DateN/A
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)0.53%
PT rev (3m)4.38%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.41%
EPS NY rev (1m)0%
EPS NY rev (3m)2.07%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.03%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.42%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.86 | ||
| Fwd PE | 24.82 | ||
| P/S | 4.37 | ||
| P/FCF | 23.87 | ||
| P/OCF | 21.19 | ||
| P/B | 10.24 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.08 |
EPS(TTM)10.97
EY3.59%
EPS(NY)12.32
Fwd EY4.03%
FCF(TTM)12.81
FCFY4.19%
OCF(TTM)14.42
OCFY4.72%
SpS69.97
BVpS29.85
TBVpS-54.8
PEG (NY)2.51
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 | 3.53 |
F-Score6
WACC8.74%
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 of INTL BUSINESS MACHINES CORP (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.
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 27.86 and the Price/Book (PB) ratio is 10.24.
Can you provide the financial health for IBM stock?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM) is 2 / 10.