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. IBM has a medium profitability rating, but doesn't score so well on its financial health evaluation. 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.
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 (3.76%) which is in line with its industry peers.
IBM's Return On Equity of 20.36% is amongst the best of the industry. IBM outperforms 85.53% of its industry peers.
IBM's Return On Invested Capital of 7.22% is in line compared to the rest of the industry. IBM outperforms 44.74% of its industry peers.
IBM had an Average Return On Invested Capital over the past 3 years of 7.26%. This 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.
With an excellent Operating Margin value of 14.89%, IBM belongs to the best of the industry, outperforming 92.11% of the companies in the same industry.
IBM's Operating Margin has improved in the last couple of years.
The Gross Margin of IBM (57.04%) is comparable to the rest of the industry.
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
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.
Looking at the Altman-Z score, with a value of 3.33, IBM is in the better half of the industry, outperforming 71.05% 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.
Looking at the Debt to FCF ratio, with a value of 5.06, IBM is in line with its industry, outperforming 46.05% of the companies in the same 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 Debt to Equity ratio of 2.10. This is amonst the worse of the industry: IBM underperforms 81.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.1 | ||
| Debt/FCF | 5.06 | ||
| Altman-Z | 3.33 |
ROIC/WACC0.75
WACC9.67%
2.3 Liquidity
A Current Ratio of 1.01 indicates that IBM should not have too much problems paying its short term obligations.
With a Current ratio value of 1.01, IBM is not doing good in the industry: 71.05% of the companies in the same industry are doing better.
A Quick Ratio of 0.97 indicates that IBM may have some problems paying its short term obligations.
The Quick ratio of IBM (0.97) is worse than 71.05% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.01 | ||
| Quick Ratio | 0.97 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.22% over the past year.
The Earnings Per Share has been decreasing by -4.21% on average over the past years.
Looking at the last year, IBM 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, 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
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.
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
A Price/Earnings ratio of 25.61 indicates a quite expensive valuation of IBM.
Compared to the rest of the industry, the Price/Earnings ratio of IBM is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 26.35. IBM is around the same levels.
A Price/Forward Earnings ratio of 22.46 indicates a rather expensive valuation of IBM.
IBM's Price/Forward Earnings is on the same level as the industry average.
IBM's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.20.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.61 | ||
| Fwd PE | 22.46 |
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.
The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.53 | ||
| EV/EBITDA | 20.14 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates IBM does not grow enough to justify the current Price/Earnings ratio.
IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.73
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.
IBM's Dividend Yield is a higher than the industry average which is at 6.98.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.40.
| 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
112.79% of the earnings are spent on dividend by IBM. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP112.79%
EPS Next 2Y6.4%
EPS Next 3Y6.27%
FRA:IBM (5/28/2025, 5:24:57 PM)
231.3
+0.2 (+0.09%)
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 Cap214.97B
Analysts72.59
Price Target224.5 (-2.94%)
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 | 25.61 | ||
| Fwd PE | 22.46 | ||
| P/S | 3.89 | ||
| P/FCF | 19.53 | ||
| P/OCF | 17.89 | ||
| P/B | 9.08 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.14 |
EPS(TTM)9.03
EY3.9%
EPS(NY)10.3
Fwd EY4.45%
FCF(TTM)11.84
FCFY5.12%
OCF(TTM)12.93
OCFY5.59%
SpS59.53
BVpS25.47
TBVpS-48.87
PEG (NY)3.73
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 | 3.33 |
F-Score5
WACC9.67%
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%