INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - NYSE:IBM - US4592001014 - Common Stock
253.44 USD
-3.57 (-1.39%)
253.46 USD
+0.02 (+0.01%)
IBM gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 86 industry peers in the IT Services industry. IBM scores excellent on profitability, but 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
IBM had positive earnings in the past year.
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 better than 65.12% of its industry peers.
IBM has a Return On Equity of 21.20%. This is amongst the best in the industry. IBM outperforms 86.05% of its industry peers.
IBM has a Return On Invested Capital of 7.55%. This is in the better half of the industry: IBM outperforms 67.44% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is significantly below the industry average of 21.79%.
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 76.74% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 15.32%, IBM belongs to the top of the industry, outperforming 81.40% of the companies in the same industry.
IBM's Operating Margin has improved in the last couple of years.
IBM has a better Gross Margin (57.57%) than 77.91% 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
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
The debt/assets ratio for IBM has been reduced compared to a year ago.
2.2 Solvency
IBM has an Altman-Z score of 3.22. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM has a Altman-Z score of 3.22. This is comparable to the rest of the industry: IBM outperforms 54.65% of its industry peers.
The Debt to FCF ratio of IBM is 5.46, which is a neutral value as it means it would take IBM, 5.46 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 5.46, IBM perfoms like the industry average, outperforming 55.81% of the companies in the same industry.
A Debt/Equity ratio of 2.01 is on the high side and indicates that IBM has dependencies on debt financing.
The Debt to Equity ratio of IBM (2.01) is worse than 77.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.22 |
ROIC/WACC0.84
WACC9.03%
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.
IBM has a Current ratio of 0.91. This is amonst the worse of the industry: IBM underperforms 81.40% of its industry peers.
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 has a worse Quick ratio (0.87) than 81.40% 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.
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 2.69% in the last year.
IBM shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 1.69% yearly.
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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.21% yearly.
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
With a Price/Earnings ratio of 23.86, IBM is valued on the expensive side.
IBM's Price/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/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 21.15 indicates a rather expensive valuation of IBM.
The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
IBM is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.73, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.86 | ||
| Fwd PE | 21.15 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA is on the same level as the industry average.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit cheaper than the industry average as 69.77% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.08 | ||
| EV/EBITDA | 19.22 |
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)2.75
PEG (5Y)N/A
EPS Next 2Y7.71%
EPS Next 3Y6.93%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.61%, IBM has a reasonable but not impressive dividend return.
IBM's Dividend Yield is rather good when compared to the industry average which is at 2.36. IBM pays more dividend than 95.35% of the companies in the same industry.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.83%.
IBM has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of IBM decreased in the last 3 years.
Dividend Growth(5Y)0.83%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
IBM pays out 106.31% 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.
DP106.31%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
253.44
-3.57 (-1.39%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.2%
Inst Owner Change-1.18%
Ins Owners0.09%
Ins Owner Change0.85%
Market Cap236.08B
Analysts70
Price Target280.34 (10.61%)
Short Float %1.58%
Short Ratio3.02
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.61% |
Yearly Dividend6.68
Dividend Growth(5Y)0.83%
DP106.31%
Div Incr Years2
Div Non Decr Years2
Ex-Date
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)0.37%
PT rev (3m)9.73%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-1.1%
EPS NY rev (1m)1.96%
EPS NY rev (3m)1.68%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.25%
Revenue NY rev (1m)0.3%
Revenue NY rev (3m)0.98%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.86 | ||
| Fwd PE | 21.15 | ||
| P/S | 3.69 | ||
| P/FCF | 20.08 | ||
| P/OCF | 17.77 | ||
| P/B | 8.58 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.22 |
EPS(TTM)10.62
EY4.19%
EPS(NY)11.99
Fwd EY4.73%
FCF(TTM)12.62
FCFY4.98%
OCF(TTM)14.26
OCFY5.63%
SpS68.75
BVpS29.53
TBVpS-56.09
PEG (NY)2.75
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 | 3.22 |
F-Score5
WACC9.03%
ROIC/WACC0.84
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%