INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
Europe - FRA:IBM - US4592001014 - Common Stock
263.1 EUR
-3.8 (-1.42%)
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 70 industry peers in the IT Services industry. While IBM belongs to the best of the industry regarding profitability, there are 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.
Each year in the past 5 years IBM has been profitable.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.40%, IBM is in the better half of the industry, outperforming 64.29% of the companies in the same industry.
Looking at the Return On Equity, with a value of 28.34%, IBM belongs to the top of the industry, outperforming 88.57% of the companies in the same industry.
IBM has a Return On Invested Capital (8.07%) which is in line with its industry peers.
The Average Return On Invested Capital over the past 3 years for IBM is below the industry average of 11.69%.
The last Return On Invested Capital (8.07%) for IBM is above the 3 year average (7.07%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.4% | ||
| ROE | 28.34% | ||
| ROIC | 8.07% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.07%
ROIC(5y)6.14%
1.3 Margins
Looking at the Profit Margin, with a value of 12.09%, IBM belongs to the top of the industry, outperforming 92.86% 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 16.06%, IBM belongs to the best of the industry, outperforming 92.86% of the companies in the same industry.
IBM's Operating Margin has been stable in the last couple of years.
IBM's Gross Margin of 57.81% is in line compared to the rest of the industry. IBM outperforms 44.29% 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 | 16.06% | ||
| PM (TTM) | 12.09% | ||
| GM | 57.81% |
OM growth 3Y10.6%
OM growth 5Y0.28%
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.
IBM has more shares outstanding than it did 1 year ago.
IBM has more shares outstanding than it did 5 years ago.
The debt/assets ratio for IBM has been reduced compared to a year ago.
2.2 Solvency
IBM has an Altman-Z score of 3.58. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM has a Altman-Z score of 3.58. This is in the better half of the industry: IBM outperforms 77.14% of its industry peers.
The Debt to FCF ratio of IBM is 5.27, which is a neutral value as it means it would take IBM, 5.27 years of fcf income to pay off all of its debts.
IBM has a Debt to FCF ratio (5.27) which is in line with its industry peers.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
IBM has a worse Debt to Equity ratio (1.98) than 81.43% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.58 |
ROIC/WACC0.95
WACC8.45%
2.3 Liquidity
A Current Ratio of 0.93 indicates that IBM may have some problems paying its short term obligations.
IBM's Current ratio of 0.93 is on the low side compared to the rest of the industry. IBM is outperformed by 72.86% of its industry peers.
A Quick Ratio of 0.89 indicates that IBM may have some problems paying its short term obligations.
IBM has a Quick ratio of 0.89. This is in the lower half of the industry: IBM underperforms 74.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.71%.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.21% yearly.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 4.51% in the last year.
The Revenue has been growing slightly by 1.69% on average over the past years.
EPS 1Y (TTM)6.71%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.22%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
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 6.07% on average per year.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.12% yearly.
EPS Next Y11.14%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
EPS Next 5Y6.07%
Revenue Next Year6.83%
Revenue Next 2Y5.65%
Revenue Next 3Y5.19%
Revenue Next 5Y5.12%
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
IBM is valuated quite expensively with a Price/Earnings ratio of 27.87.
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 25.89, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 24.90 indicates a rather expensive valuation of IBM.
Based on the Price/Forward Earnings ratio, IBM is valued a bit more expensive than the industry average as 64.29% of the companies are valued more cheaply.
IBM is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 34.59, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.87 | ||
| Fwd PE | 24.9 |
4.2 Price Multiples
75.71% of the companies in the same industry are cheaper than IBM, based on the Enterprise Value to EBITDA ratio.
60.00% of the companies in the same industry are cheaper than IBM, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.79 | ||
| EV/EBITDA | 21.76 |
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)2.5
PEG (5Y)N/A
EPS Next 2Y9.01%
EPS Next 3Y7.8%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.15%. Purely for dividend investing, there may be better candidates out there.
IBM's Dividend Yield is comparable with the industry average which is at 3.87.
Compared to an average S&P500 Dividend Yield of 2.36, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.15% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.81%.
Dividend Growth(5Y)0.81%
Div Incr Years6
Div Non Decr Years6
5.3 Sustainability
78.75% 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.
DP78.75%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
FRA:IBM (11/14/2025, 7:00:00 PM)
263.1
-3.8 (-1.42%)
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 Cap245.08B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts70.37
Price Target244.88 (-6.93%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.15% |
Yearly Dividend5.78
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years6
Div Non Decr Years6
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)6.08%
Min EPS beat(2)4.89%
Max EPS beat(2)7.28%
EPS beat(4)4
Avg EPS beat(4)7.18%
Min EPS beat(4)3.59%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.75%
EPS beat(12)11
Avg EPS beat(12)5.17%
EPS beat(16)15
Avg EPS beat(16)4.03%
Revenue beat(2)2
Avg Revenue beat(2)0.92%
Min Revenue beat(2)0.5%
Max Revenue beat(2)1.34%
Revenue beat(4)3
Avg Revenue beat(4)0.23%
Min Revenue beat(4)-0.93%
Max Revenue beat(4)1.34%
Revenue beat(8)3
Avg Revenue beat(8)-0.35%
Revenue beat(12)4
Avg Revenue beat(12)-0.51%
Revenue beat(16)8
Avg Revenue beat(16)0.23%
PT rev (1m)1.72%
PT rev (3m)5.4%
EPS NQ rev (1m)-0.45%
EPS NQ rev (3m)-0.04%
EPS NY rev (1m)2.1%
EPS NY rev (3m)4.28%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)0.42%
Revenue NY rev (3m)0.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.87 | ||
| Fwd PE | 24.9 | ||
| P/S | 4.35 | ||
| P/FCF | 23.79 | ||
| P/OCF | 21.12 | ||
| P/B | 10.2 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.76 |
EPS(TTM)9.44
EY3.59%
EPS(NY)10.57
Fwd EY4.02%
FCF(TTM)11.06
FCFY4.2%
OCF(TTM)12.46
OCFY4.73%
SpS60.43
BVpS25.78
TBVpS-47.32
PEG (NY)2.5
PEG (5Y)N/A
Graham Number74
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.4% | ||
| ROE | 28.34% | ||
| ROCE | 9.45% | ||
| ROIC | 8.07% | ||
| ROICexc | 9.31% | ||
| ROICexgc | 52.18% | ||
| OM | 16.06% | ||
| PM (TTM) | 12.09% | ||
| GM | 57.81% | ||
| FCFM | 18.31% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.07%
ROIC(5y)6.14%
ROICexc(3y)8.07%
ROICexc(5y)6.94%
ROICexgc(3y)39.64%
ROICexgc(5y)31.12%
ROCE(3y)8.28%
ROCE(5y)7.2%
ROICexgc growth 3Y23.43%
ROICexgc growth 5Y15.29%
ROICexc growth 3Y14.68%
ROICexc growth 5Y5.67%
OM growth 3Y10.6%
OM growth 5Y0.28%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
F-Score6
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Debt/EBITDA | 3.6 | ||
| Cap/Depr | 31.23% | ||
| Cap/Sales | 2.31% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.87% | ||
| Profit Quality | 151.41% | ||
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 | ||
| Altman-Z | 3.58 |
F-Score6
WACC8.45%
ROIC/WACC0.95
Cap/Depr(3y)39.45%
Cap/Depr(5y)41.95%
Cap/Sales(3y)2.96%
Cap/Sales(5y)3.91%
Profit Quality(3y)291.08%
Profit Quality(5y)263.12%
High Growth Momentum
Growth
EPS 1Y (TTM)6.71%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.22%
EPS Next Y11.14%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
EPS Next 5Y6.07%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
Revenue Next Year6.83%
Revenue Next 2Y5.65%
Revenue Next 3Y5.19%
Revenue Next 5Y5.12%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
EBIT Next 5Y17.21%
FCF growth 1Y3.97%
FCF growth 3Y5.46%
FCF growth 5Y-0.17%
OCF growth 1Y0.37%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%
INTL BUSINESS MACHINES CORP / IBM.DE FAQ
What is the fundamental rating for IBM stock?
ChartMill assigns a fundamental rating of 4 / 10 to IBM.DE.
What is the valuation status for IBM stock?
ChartMill assigns a valuation rating of 2 / 10 to INTL BUSINESS MACHINES CORP (IBM.DE). This can be considered as Overvalued.
How profitable is INTL BUSINESS MACHINES CORP (IBM.DE) stock?
INTL BUSINESS MACHINES CORP (IBM.DE) has a profitability rating of 7 / 10.
How financially healthy is INTL BUSINESS MACHINES CORP?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM.DE) is 3 / 10.
Is the dividend of INTL BUSINESS MACHINES CORP sustainable?
The dividend rating of INTL BUSINESS MACHINES CORP (IBM.DE) is 4 / 10 and the dividend payout ratio is 78.75%.