INTL BUSINESS MACHINES CORP (IBM.DE) Stock Fundamental Analysis
FRA:IBM - US4592001014 - Common Stock
207.5 EUR
+0.4 (+0.19%)
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 72 industry peers in the IT Services industry. IBM scores excellent on profitability, but there are concerns on its financial health. 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.
IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
IBM has a Return On Assets of 3.93%. This is comparable to the rest of the industry: IBM outperforms 47.22% of its industry peers.
IBM has a Return On Equity of 21.20%. This is amongst the best in the industry. IBM outperforms 84.72% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.55%, IBM is in line with its industry, outperforming 45.83% of the companies in the same industry.
IBM had an Average Return On Invested Capital over the past 3 years of 7.26%. This is below the industry average of 11.32%.
The 3 year average ROIC (7.26%) for IBM is below the current ROIC(7.55%), indicating increased profibility in the last year.
| 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
The Profit Margin of IBM (9.11%) is better than 86.11% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 15.32%, IBM belongs to the best of the industry, outperforming 90.28% of the companies in the same industry.
In the last couple of years the Operating Margin of IBM has grown nicely.
IBM has a Gross Margin of 57.57%. This is comparable to the rest of the industry: IBM outperforms 44.44% of its industry peers.
IBM's Gross Margin has been stable in the last couple of years.
| 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.
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.
Compared to 1 year ago, IBM has an improved debt to assets ratio.
2.2 Solvency
IBM has an Altman-Z score of 3.16. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
With a decent Altman-Z score value of 3.16, IBM is doing good in the industry, outperforming 66.67% 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 worse Debt to FCF ratio (5.46) than 61.11% of its industry peers.
A Debt/Equity ratio of 2.01 is on the high side and indicates that IBM has dependencies on debt financing.
With a Debt to Equity ratio value of 2.01, IBM is not doing good in the industry: 86.11% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.16 |
ROIC/WACC0.85
WACC8.87%
2.3 Liquidity
IBM has a Current Ratio of 0.91. This is a bad value and indicates that IBM is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.91, IBM is doing worse than 80.56% of the companies in the same industry.
IBM has a Quick Ratio of 0.91. 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's Quick ratio of 0.87 is on the low side compared to the rest of the industry. IBM is outperformed by 80.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 4.32% 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 2.69% in the last 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)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
The Earnings Per Share is expected to grow by 6.21% on average over the next years.
The Revenue is expected to grow by 4.94% on average over the next years.
EPS Next Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
Revenue Next 5Y4.94%
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
IBM is valuated rather expensively with a Price/Earnings ratio of 22.68.
IBM's Price/Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.24, IBM is valued at the same level.
With a Price/Forward Earnings ratio of 20.10, IBM is valued on the expensive side.
The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
IBM's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 35.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.68 | ||
| Fwd PE | 20.1 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. IBM is more expensive than 75.00% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.08 | ||
| EV/EBITDA | 18.42 |
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)2.62
PEG (5Y)N/A
EPS Next 2Y7.71%
EPS Next 3Y6.93%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.81%, IBM has a reasonable but not impressive dividend return.
IBM's Dividend Yield is a higher than the industry average which is at 7.36.
IBM's Dividend Yield is a higher than the S&P500 average which is at 2.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.81% |
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 106.31% of its income as dividend. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP106.31%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
FRA:IBM (8/22/2025, 7:00:00 PM)
207.5
+0.4 (+0.19%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.2%
Inst Owner ChangeN/A
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap193.29B
Analysts71.11
Price Target239.94 (15.63%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.81% |
Yearly Dividend5.76
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)3.27%
PT rev (3m)6.88%
EPS NQ rev (1m)0.2%
EPS NQ rev (3m)-1.32%
EPS NY rev (1m)1.96%
EPS NY rev (3m)1.68%
Revenue NQ rev (1m)0.16%
Revenue NQ rev (3m)2.89%
Revenue NY rev (1m)0.84%
Revenue NY rev (3m)0.98%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.68 | ||
| Fwd PE | 20.1 | ||
| P/S | 3.5 | ||
| P/FCF | 19.08 | ||
| P/OCF | 16.89 | ||
| P/B | 8.16 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.42 |
EPS(TTM)9.15
EY4.41%
EPS(NY)10.32
Fwd EY4.98%
FCF(TTM)10.87
FCFY5.24%
OCF(TTM)12.28
OCFY5.92%
SpS59.22
BVpS25.44
TBVpS-48.32
PEG (NY)2.62
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 | 3.16 |
F-Score5
WACC8.87%
ROIC/WACC0.85
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 Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.78%
EBIT Next 3Y26.23%
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%