INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
FRA:IBM - Deutsche Boerse Ag - US4592001014 - Common Stock - Currency: EUR
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 77 industry peers in the IT Services industry. There are concerns on the financial health of IBM while its profitability can be described as average. 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.
In the past 5 years IBM has always been profitable.
Each year in the past 5 years IBM had a positive operating cash flow.
1.2 Ratios
The Return On Assets of IBM (3.76%) is comparable to the rest of the industry.
The Return On Equity of IBM (20.36%) is better than 83.12% of its industry peers.
The Return On Invested Capital of IBM (7.22%) is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is below the industry average of 11.17%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.76% | ||
| ROE | 20.36% | ||
| ROIC | 7.22% |
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
IBM has a Profit Margin of 8.71%. This is amongst the best in the industry. IBM outperforms 89.61% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 14.89%, IBM belongs to the top of the industry, outperforming 92.21% of the companies in the same industry.
IBM's Operating Margin has improved in the last couple of years.
IBM has a Gross Margin of 57.04%. This is comparable to the rest of the industry: IBM outperforms 45.45% of its industry peers.
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 | 14.89% | ||
| 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), IBM is destroying value.
Compared to 1 year ago, IBM has more shares outstanding
IBM has more shares outstanding than it did 5 years ago.
IBM has a better debt/assets ratio than last year.
2.2 Solvency
IBM has an Altman-Z score of 3.31. 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 3.31, IBM is in the better half of the industry, outperforming 70.13% of the companies in the same industry.
IBM has a debt to FCF ratio of 5.06. This is a neutral value as IBM would need 5.06 years to pay back of all of its debts.
IBM has a Debt to FCF ratio (5.06) which is comparable to the rest of the industry.
A Debt/Equity ratio of 2.10 is on the high side and indicates that IBM has dependencies on debt financing.
IBM has a worse Debt to Equity ratio (2.10) than 81.82% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 5.06 | ||
| Altman-Z | 3.31 |
ROIC/WACC0.79
WACC9.17%
2.3 Liquidity
A Current Ratio of 1.01 indicates that IBM should not have too much problems paying its short term obligations.
The Current ratio of IBM (1.01) is worse than 71.43% of its industry peers.
A Quick Ratio of 0.97 indicates that IBM may have some problems paying its short term obligations.
IBM has a Quick ratio of 0.97. This is in the lower half of the industry: IBM underperforms 70.13% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.22%.
Measured over the past years, IBM shows a decrease in Earnings Per Share. The EPS has been decreasing by -4.21% on average per year.
The Revenue has been growing slightly by 1.23% 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)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, IBM will show a small growth in Earnings Per Share. The EPS will grow by 7.16% on average per year.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.68% yearly.
EPS Next Y6.87%
EPS Next 2Y6.4%
EPS Next 3Y6.27%
EPS Next 5Y7.16%
Revenue Next Year5.33%
Revenue Next 2Y4.83%
Revenue Next 3Y4.61%
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.
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
With a Price/Earnings ratio of 24.97, IBM is valued on the expensive side.
IBM's Price/Earnings is on the same level as the industry average.
IBM is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.25, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 21.89 indicates a rather expensive valuation of IBM.
IBM's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (22.15), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.97 | ||
| Fwd PE | 21.89 |
4.2 Price Multiples
68.83% of the companies in the same industry are cheaper than IBM, based on the Enterprise Value to EBITDA ratio.
The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.03 | ||
| EV/EBITDA | 19.88 |
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)3.64
PEG (5Y)N/A
EPS Next 2Y6.4%
EPS Next 3Y6.27%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.60%.
Compared to an average industry Dividend Yield of 6.55, IBM pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.38, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.83%.
Dividend Growth(5Y)0.83%
Div Incr Years6
Div Non Decr Years6
5.3 Sustainability
112.79% 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.
DP112.79%
EPS Next 2Y6.4%
EPS Next 3Y6.27%
FRA:IBM (6/2/2025, 10:00:14 AM)
225.75
-2.2 (-0.97%)
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 Cap209.81B
Analysts72.59
Price Target224.5 (-0.55%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.6% |
Yearly Dividend5.89
Dividend Growth(5Y)0.83%
DP112.79%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.28%
Min EPS beat(2)3.59%
Max EPS beat(2)12.97%
EPS beat(4)4
Avg EPS beat(4)7.09%
Min EPS beat(4)2.27%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.47%
EPS beat(12)11
Avg EPS beat(12)4.29%
EPS beat(16)14
Avg EPS beat(16)3.31%
Revenue beat(2)1
Avg Revenue beat(2)-0.46%
Min Revenue beat(2)-0.93%
Max Revenue beat(2)0.01%
Revenue beat(4)1
Avg Revenue beat(4)-0.65%
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)4
Avg Revenue beat(12)-0.27%
Revenue beat(16)6
Avg Revenue beat(16)-2.96%
PT rev (1m)-0.08%
PT rev (3m)6.43%
EPS NQ rev (1m)-0.09%
EPS NQ rev (3m)1.07%
EPS NY rev (1m)2.11%
EPS NY rev (3m)1.93%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)2.36%
Revenue NY rev (1m)1.56%
Revenue NY rev (3m)1.72%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.97 | ||
| Fwd PE | 21.89 | ||
| P/S | 3.79 | ||
| P/FCF | 19.03 | ||
| P/OCF | 17.43 | ||
| P/B | 8.85 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.88 |
EPS(TTM)9.04
EY4%
EPS(NY)10.31
Fwd EY4.57%
FCF(TTM)11.86
FCFY5.25%
OCF(TTM)12.95
OCFY5.74%
SpS59.62
BVpS25.51
TBVpS-48.94
PEG (NY)3.64
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.76% | ||
| ROE | 20.36% | ||
| ROCE | 8.46% | ||
| ROIC | 7.22% | ||
| ROICexc | 8.58% | ||
| ROICexgc | 54.54% | ||
| OM | 14.89% | ||
| PM (TTM) | 8.71% | ||
| GM | 57.04% | ||
| FCFM | 19.89% |
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 | 5.06 | ||
| Debt/EBITDA | 4.01 | ||
| Cap/Depr | 24.38% | ||
| Cap/Sales | 1.83% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 97.03% | ||
| Profit Quality | 228.33% | ||
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 | ||
| Altman-Z | 3.31 |
F-Score5
WACC9.17%
ROIC/WACC0.79
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 Y6.87%
EPS Next 2Y6.4%
EPS Next 3Y6.27%
EPS Next 5Y7.16%
Revenue 1Y (TTM)1.23%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%0.55%
Revenue Next Year5.33%
Revenue Next 2Y4.83%
Revenue Next 3Y4.61%
Revenue Next 5Y4.68%
EBIT growth 1Y5.13%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year59.42%
EBIT Next 3Y21.07%
EBIT Next 5Y10.85%
FCF growth 1Y39.31%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y24.5%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%