INTL BUSINESS MACHINES CORP (1IBM.MI) Stock Fundamental Analysis
BIT:1IBM - Euronext Milan - US4592001014 - Common Stock - Currency: EUR
We assign a fundamental rating of 4 out of 10 to 1IBM. 1IBM was compared to 77 industry peers in the IT Services industry. While 1IBM is still in line with the averages on profitability rating, there are concerns on its financial health. 1IBM is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
1IBM had positive earnings in the past year.
1IBM had a positive operating cash flow in the past year.
Each year in the past 5 years 1IBM has been profitable.
In the past 5 years 1IBM always reported a positive cash flow from operatings.
1.2 Ratios
1IBM has a Return On Assets (3.76%) which is comparable to the rest of the industry.
1IBM's Return On Equity of 20.36% is amongst the best of the industry. 1IBM outperforms 84.42% of its industry peers.
1IBM's Return On Invested Capital of 7.10% is in line compared to the rest of the industry. 1IBM outperforms 44.16% of its industry peers.
1IBM had an Average Return On Invested Capital over the past 3 years of 7.26%. This is below the industry average of 11.17%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.76% | ||
| ROE | 20.36% | ||
| ROIC | 7.1% |
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 1IBM (8.71%) is better than 88.31% of its industry peers.
1IBM's Profit Margin has declined in the last couple of years.
1IBM has a better Operating Margin (14.64%) than 90.91% of its industry peers.
In the last couple of years the Operating Margin of 1IBM has grown nicely.
Looking at the Gross Margin, with a value of 57.04%, 1IBM is in line with its industry, outperforming 44.16% of the companies in the same industry.
In the last couple of years the Gross Margin of 1IBM has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.64% | ||
| PM (TTM) | 8.71% | ||
| GM | 57.04% |
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
1IBM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
The number of shares outstanding for 1IBM has been increased compared to 1 year ago.
The number of shares outstanding for 1IBM has been increased compared to 5 years ago.
Compared to 1 year ago, 1IBM has an improved debt to assets ratio.
2.2 Solvency
1IBM has an Altman-Z score of 3.31. This indicates that 1IBM is financially healthy and has little risk of bankruptcy at the moment.
1IBM has a better Altman-Z score (3.31) than 70.13% of its industry peers.
1IBM has a debt to FCF ratio of 5.03. This is a neutral value as 1IBM would need 5.03 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 5.03, 1IBM is in line with its industry, outperforming 45.45% of the companies in the same industry.
1IBM has a Debt/Equity ratio of 2.10. This is a high value indicating a heavy dependency on external financing.
1IBM has a Debt to Equity ratio of 2.10. This is amonst the worse of the industry: 1IBM underperforms 80.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 5.03 | ||
| Altman-Z | 3.31 |
ROIC/WACC0.77
WACC9.25%
2.3 Liquidity
1IBM has a Current Ratio of 1.01. This is a normal value and indicates that 1IBM is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.01, 1IBM is not doing good in the industry: 70.13% of the companies in the same industry are doing better.
1IBM has a Quick Ratio of 1.01. This is a bad value and indicates that 1IBM is not financially healthy enough and could expect problems in meeting its short term obligations.
1IBM has a worse Quick ratio (0.97) than 68.83% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
1IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.22%.
The Earnings Per Share has been decreasing by -4.21% on average over the past years.
Looking at the last year, 1IBM shows a small growth in Revenue. The Revenue has grown by 1.23% in the last year.
The Revenue has been growing slightly by 1.69% on average over the past years.
EPS 1Y (TTM)3.22%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%-4.76%
Revenue 1Y (TTM)1.23%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.55%
3.2 Future
Based on estimates for the next years, 1IBM will show a small growth in Earnings Per Share. The EPS will grow by 7.16% on average per year.
The Revenue is expected to grow by 4.68% on average over the next years.
EPS Next Y4.66%
EPS Next 2Y5.5%
EPS Next 3Y6.12%
EPS Next 5Y7.16%
Revenue Next Year3.71%
Revenue Next 2Y4.18%
Revenue Next 3Y4.17%
Revenue Next 5Y4.68%
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
The Price/Earnings ratio is 25.86, which means the current valuation is very expensive for 1IBM.
1IBM's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 26.43. 1IBM is around the same levels.
With a Price/Forward Earnings ratio of 23.04, 1IBM is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of 1IBM is on the same level as its industry peers.
1IBM's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.17.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.86 | ||
| Fwd PE | 23.04 |
4.2 Price Multiples
1IBM's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. 1IBM is more expensive than 68.83% of the companies in the same industry.
1IBM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.59 | ||
| EV/EBITDA | 20.17 |
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 1IBM may justify a higher PE ratio.
PEG (NY)5.55
PEG (5Y)N/A
EPS Next 2Y5.5%
EPS Next 3Y6.12%
5. Dividend
5.1 Amount
1IBM has a Yearly Dividend Yield of 2.80%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 6.55, 1IBM pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.38, 1IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.8% |
5.2 History
The dividend of 1IBM has a limited annual growth rate of 0.83%.
Dividend Growth(5Y)0.83%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
112.79% of the earnings are spent on dividend by 1IBM. This is not a sustainable payout ratio.
1IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP112.79%
EPS Next 2Y5.5%
EPS Next 3Y6.12%
BIT:1IBM (6/4/2025, 7:00:00 PM)
232.7
+16 (+7.38%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners64.25%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap216.27B
Analysts72.59
Price Target222.22 (-4.5%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.8% |
Yearly Dividend5.89
Dividend Growth(5Y)0.83%
DP112.79%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.34%
Min EPS beat(2)3.59%
Max EPS beat(2)13.1%
EPS beat(4)4
Avg EPS beat(4)7.12%
Min EPS beat(4)2.27%
Max EPS beat(4)13.1%
EPS beat(8)8
Avg EPS beat(8)5.49%
EPS beat(12)11
Avg EPS beat(12)4.31%
EPS beat(16)14
Avg EPS beat(16)3.32%
Revenue beat(2)1
Avg Revenue beat(2)-0.44%
Min Revenue beat(2)-0.93%
Max Revenue beat(2)0.06%
Revenue beat(4)1
Avg Revenue beat(4)-0.64%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)0.06%
Revenue beat(8)1
Avg Revenue beat(8)-0.88%
Revenue beat(12)4
Avg Revenue beat(12)-0.27%
Revenue beat(16)6
Avg Revenue beat(16)-2.96%
PT rev (1m)-6.4%
PT rev (3m)5.3%
EPS NQ rev (1m)1.32%
EPS NQ rev (3m)2.97%
EPS NY rev (1m)-0.13%
EPS NY rev (3m)0.2%
Revenue NQ rev (1m)2.36%
Revenue NQ rev (3m)1.24%
Revenue NY rev (1m)0.2%
Revenue NY rev (3m)-0.88%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.86 | ||
| Fwd PE | 23.04 | ||
| P/S | 3.92 | ||
| P/FCF | 19.59 | ||
| P/OCF | 18.04 | ||
| P/B | 9.16 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.17 |
EPS(TTM)9
EY3.87%
EPS(NY)10.1
Fwd EY4.34%
FCF(TTM)11.88
FCFY5.11%
OCF(TTM)12.9
OCFY5.54%
SpS59.38
BVpS25.4
TBVpS-48.74
PEG (NY)5.55
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.76% | ||
| ROE | 20.36% | ||
| ROCE | 8.32% | ||
| ROIC | 7.1% | ||
| ROICexc | 8.43% | ||
| ROICexgc | 53.64% | ||
| OM | 14.64% | ||
| PM (TTM) | 8.71% | ||
| GM | 57.04% | ||
| FCFM | 20.01% |
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 | 2.1 | ||
| Debt/FCF | 5.03 | ||
| Debt/EBITDA | 4.05 | ||
| Cap/Depr | 22.81% | ||
| Cap/Sales | 1.71% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 98.12% | ||
| Profit Quality | 229.69% | ||
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 | ||
| Altman-Z | 3.31 |
F-Score5
WACC9.25%
ROIC/WACC0.77
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)3.22%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%-4.76%
EPS Next Y4.66%
EPS Next 2Y5.5%
EPS Next 3Y6.12%
EPS Next 5Y7.16%
Revenue 1Y (TTM)1.23%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.55%
Revenue Next Year3.71%
Revenue Next 2Y4.18%
Revenue Next 3Y4.17%
Revenue Next 5Y4.68%
EBIT growth 1Y3.37%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year53.02%
EBIT Next 3Y20.05%
EBIT Next 5Y10.85%
FCF growth 1Y40.14%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y24.5%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%