INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - NYSE:IBM - US4592001014 - Common Stock
277.22 USD
-0.6 (-0.22%)
277.05 USD
-0.17 (-0.06%)
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 86 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
In the past year IBM was profitable.
In the past year IBM had a positive cash flow from operations.
IBM had positive earnings in each of the past 5 years.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
IBM has a Return On Assets of 3.93%. This is in the better half of the industry: IBM outperforms 65.12% of its industry peers.
The Return On Equity of IBM (21.20%) is better than 86.05% of its industry peers.
IBM has a better Return On Invested Capital (7.55%) than 66.28% of its industry peers.
The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 21.42%.
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
With a decent Profit Margin value of 9.11%, IBM is doing good in the industry, outperforming 76.74% of the companies in the same industry.
In the last couple of years the Profit Margin of IBM has declined.
IBM's Operating Margin of 15.32% is amongst the best of the industry. IBM outperforms 81.40% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
IBM has a better Gross Margin (57.57%) than 79.07% of its industry peers.
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
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
IBM has a better debt/assets ratio than last year.
2.2 Solvency
IBM has an Altman-Z score of 3.33. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of IBM (3.33) is comparable to the rest of the industry.
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.
IBM's Debt to FCF ratio of 5.46 is in line compared to the rest of the industry. IBM outperforms 54.65% of its industry peers.
A Debt/Equity ratio of 2.01 is on the high side and indicates that IBM has dependencies on debt financing.
IBM has a worse Debt to Equity ratio (2.01) than 77.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.33 |
ROIC/WACC0.89
WACC8.45%
2.3 Liquidity
A Current Ratio of 0.91 indicates that IBM may have some problems paying its short term obligations.
IBM's Current ratio of 0.91 is on the low side compared to the rest of the industry. IBM is outperformed by 82.56% of its industry peers.
IBM has a Quick Ratio of 0.91. 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 has a Quick ratio of 0.87. This is amonst the worse of the industry: IBM underperforms 82.56% of its industry peers.
| 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.
IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 2.69%.
The Revenue has been growing slightly by 1.69% on average over the past years.
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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.21% yearly.
Based on estimates for the next years, IBM will show a small growth in Revenue. The Revenue will grow by 4.94% on average per year.
EPS Next Y8.85%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y6.21%
Revenue Next Year6.38%
Revenue Next 2Y5.37%
Revenue Next 3Y5.04%
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 quite expensively with a Price/Earnings ratio of 26.10.
IBM's Price/Earnings is on the same level as the industry average.
IBM's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.35.
The Price/Forward Earnings ratio is 23.04, which indicates a rather expensive current valuation of IBM.
The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.86, IBM is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.1 | ||
| Fwd PE | 23.04 |
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.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit cheaper than 62.79% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.96 | ||
| EV/EBITDA | 20.78 |
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)2.95
PEG (5Y)N/A
EPS Next 2Y7.92%
EPS Next 3Y7.16%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.33%, IBM has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.49, IBM pays a better dividend. On top of this IBM pays more dividend than 90.70% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.44, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.33% |
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.
IBM has decreased its dividend 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.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP106.31%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
277.22
-0.6 (-0.22%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.04%
Inst Owner Change0.09%
Ins Owners0.09%
Ins Owner Change0.85%
Market Cap258.24B
Analysts69.63
Price Target280.62 (1.23%)
Short Float %1.57%
Short Ratio2.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.33% |
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)0.1%
PT rev (3m)7.97%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)0.14%
EPS NY rev (1m)0.17%
EPS NY rev (3m)2.14%
Revenue NQ rev (1m)0.01%
Revenue NQ rev (3m)0.25%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.85%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.1 | ||
| Fwd PE | 23.04 | ||
| P/S | 4.03 | ||
| P/FCF | 21.96 | ||
| P/OCF | 19.44 | ||
| P/B | 9.39 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.78 |
EPS(TTM)10.62
EY3.83%
EPS(NY)12.03
Fwd EY4.34%
FCF(TTM)12.62
FCFY4.55%
OCF(TTM)14.26
OCFY5.14%
SpS68.75
BVpS29.53
TBVpS-56.09
PEG (NY)2.95
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 | 3.33 |
F-Score5
WACC8.45%
ROIC/WACC0.89
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 Y8.85%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.38%
Revenue Next 2Y5.37%
Revenue Next 3Y5.04%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
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%