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 76 industry peers in the IT Services industry. There are concerns on the financial health of IBM while its profitability can be described as average. While showing a medium growth rate, IBM is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
In the past year IBM was profitable.
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
With a Return On Assets value of 3.76%, IBM perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
IBM has a better Return On Equity (20.36%) than 85.53% of its industry peers.
IBM has a Return On Invested Capital of 7.22%. This is comparable to the rest of the industry: IBM outperforms 44.74% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is below the industry average of 10.85%.
| 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
With an excellent Profit Margin value of 8.71%, IBM belongs to the best of the industry, outperforming 89.47% of the companies in the same industry.
In the last couple of years the Profit Margin of IBM has declined.
IBM has a Operating Margin of 14.89%. This is amongst the best in the industry. IBM outperforms 92.11% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
IBM's Gross Margin of 57.04% is in line compared to the rest of the industry. IBM outperforms 44.74% of its industry peers.
IBM's Gross Margin has been stable in the last couple of years.
| 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.
The number of shares outstanding for IBM has been increased compared to 1 year ago.
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 3.32. 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 3.32, IBM is in the better half of the industry, outperforming 69.74% 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.
The Debt to FCF ratio of IBM (5.06) is comparable to the rest of the industry.
IBM has a Debt/Equity ratio of 2.10. This is a high value indicating a heavy dependency on external financing.
IBM's Debt to Equity ratio of 2.10 is on the low side compared to the rest of the industry. IBM is outperformed by 81.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 5.06 | ||
| Altman-Z | 3.32 |
ROIC/WACC0.75
WACC9.61%
2.3 Liquidity
IBM has a Current 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.
The Current ratio of IBM (1.01) is worse than 71.05% of its industry peers.
IBM has a Quick Ratio of 1.01. 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 worse Quick ratio (0.97) than 71.05% 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%.
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 1.23%.
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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 7.16% yearly.
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
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
A Price/Earnings ratio of 25.14 indicates a quite expensive valuation of IBM.
IBM's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of IBM to the average of the S&P500 Index (26.17), we can say IBM is valued inline with the index average.
A Price/Forward Earnings ratio of 22.04 indicates a rather expensive valuation of IBM.
IBM's Price/Forward 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/Forward Earnings ratio to 22.10, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.14 | ||
| Fwd PE | 22.04 |
4.2 Price Multiples
69.74% of the companies in the same industry are cheaper than IBM, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of IBM is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.17 | ||
| EV/EBITDA | 20.06 |
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)3.66
PEG (5Y)N/A
EPS Next 2Y6.4%
EPS Next 3Y6.27%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.58%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 6.98, IBM pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
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
IBM pays out 112.79% of its income as dividend. 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 (5/29/2025, 5:25:26 PM)
227.75
-3.1 (-1.34%)
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 Cap211.67B
Analysts72.59
Price Target224.5 (-1.43%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.58% |
Yearly Dividend5.91
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)-5.69%
PT rev (3m)6.43%
EPS NQ rev (1m)1.29%
EPS NQ rev (3m)1.07%
EPS NY rev (1m)2.11%
EPS NY rev (3m)1.93%
Revenue NQ rev (1m)2.29%
Revenue NQ rev (3m)2.36%
Revenue NY rev (1m)1.56%
Revenue NY rev (3m)1.72%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.14 | ||
| Fwd PE | 22.04 | ||
| P/S | 3.81 | ||
| P/FCF | 19.17 | ||
| P/OCF | 17.55 | ||
| P/B | 8.91 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.06 |
EPS(TTM)9.06
EY3.98%
EPS(NY)10.33
Fwd EY4.54%
FCF(TTM)11.88
FCFY5.22%
OCF(TTM)12.98
OCFY5.7%
SpS59.74
BVpS25.56
TBVpS-49.04
PEG (NY)3.66
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 | 3.32 |
F-Score5
WACC9.61%
ROIC/WACC0.75
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%