INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - FRA:IBM - US4592001014 - Common Stock
243.8 EUR
-4.4 (-1.77%)
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 73 industry peers in the IT Services industry. While IBM has a great profitability rating, there are quite some concerns on its financial health. 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
The Return On Assets of IBM (3.93%) is comparable to the rest of the industry.
IBM's Return On Equity of 21.20% is amongst the best of the industry. IBM outperforms 83.56% of its industry peers.
IBM has a Return On Invested Capital of 7.55%. This is comparable to the rest of the industry: IBM outperforms 45.21% of its industry peers.
The Average Return On Invested Capital over the past 3 years for IBM is below the industry average of 11.06%.
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
IBM has a better Profit Margin (9.11%) than 84.93% of its industry peers.
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 89.04% of its industry peers.
In the last couple of years the Operating Margin of IBM has grown nicely.
IBM's Gross Margin of 57.57% is in line compared to the rest of the industry. IBM outperforms 46.58% 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 | 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
IBM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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
An Altman-Z score of 3.38 indicates that IBM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.38, IBM is in the better half of the industry, outperforming 75.34% of the companies in the same industry.
IBM has a debt to FCF ratio of 5.46. This is a neutral value as IBM would need 5.46 years to pay back of all of its debts.
IBM has a Debt to FCF ratio (5.46) which is comparable to the rest of the industry.
A Debt/Equity ratio of 2.01 is on the high side and indicates that IBM has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 2.01, IBM is doing worse than 82.19% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.38 |
ROIC/WACC0.91
WACC8.27%
2.3 Liquidity
A Current Ratio of 0.91 indicates that IBM may have some problems paying its short term obligations.
IBM has a Current ratio of 0.91. This is in the lower half of the industry: IBM underperforms 79.45% of its industry peers.
A Quick Ratio of 0.87 indicates that IBM may have some problems paying its short term obligations.
IBM has a Quick ratio of 0.87. This is in the lower half of the industry: IBM underperforms 78.08% 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%.
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.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 2.69% in the last year.
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
Based on estimates for the next years, IBM will show a small growth in Earnings Per Share. The EPS will grow by 6.21% on average per year.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.94% yearly.
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
With a Price/Earnings ratio of 26.64, IBM can be considered very expensive at the moment.
IBM's Price/Earnings ratio is in line with the industry average.
IBM is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 27.02, which is the current average of the S&P500 Index.
IBM is valuated rather expensively with a Price/Forward Earnings ratio of 23.53.
61.64% of the companies in the same industry are cheaper than IBM, based on the Price/Forward Earnings ratio.
IBM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.57, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.64 | ||
| Fwd PE | 23.53 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, IBM is valued a bit more expensive than 73.97% of the companies in the same industry.
IBM's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.43 | ||
| EV/EBITDA | 21.44 |
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)3.01
PEG (5Y)N/A
EPS Next 2Y7.92%
EPS Next 3Y7.16%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.34%.
Compared to an average industry Dividend Yield of 7.36, IBM pays a bit more dividend than its industry peers.
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 | 2.34% |
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
106.31% 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.
DP106.31%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
FRA:IBM (10/10/2025, 7:00:00 PM)
243.8
-4.4 (-1.77%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.04%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap227.10B
Analysts69.63
Price Target240.73 (-1.26%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
Yearly Dividend5.7
Dividend Growth(5Y)0.83%
DP106.31%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
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)0.33%
PT rev (3m)5.9%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)-1%
EPS NY rev (1m)0.17%
EPS NY rev (3m)1.89%
Revenue NQ rev (1m)0.01%
Revenue NQ rev (3m)0.27%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.64 | ||
| Fwd PE | 23.53 | ||
| P/S | 4.12 | ||
| P/FCF | 22.43 | ||
| P/OCF | 19.85 | ||
| P/B | 9.59 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.44 |
EPS(TTM)9.15
EY3.75%
EPS(NY)10.36
Fwd EY4.25%
FCF(TTM)10.87
FCFY4.46%
OCF(TTM)12.28
OCFY5.04%
SpS59.21
BVpS25.43
TBVpS-48.31
PEG (NY)3.01
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 | 3.38 |
F-Score5
WACC8.27%
ROIC/WACC0.91
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%