INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:IBM - US4592001014 - Common Stock
305.67 USD
+7.72 (+2.59%)
305.65 USD
-0.02 (-0.01%)
IBM gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 88 industry peers in the IT Services industry. IBM has an excellent profitability rating, but there are concerns on its financial health. IBM is quite expensive at the moment. It does show a decent growth rate.
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.
- IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- IBM has a better Return On Assets (5.40%) than 69.32% of its industry peers.
- Looking at the Return On Equity, with a value of 28.34%, IBM belongs to the top of the industry, outperforming 88.64% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 8.07%, IBM is in the better half of the industry, outperforming 70.45% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 29.06%.
- 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
- The Profit Margin of IBM (12.09%) is better than 84.09% of its industry peers.
- IBM's Profit Margin has declined in the last couple of years.
- The Operating Margin of IBM (16.06%) is better than 84.09% of its industry peers.
- IBM's Operating Margin has been stable in the last couple of years.
- With a decent Gross Margin value of 57.81%, IBM is doing good in the industry, outperforming 79.55% of the companies in the same industry.
- IBM's Gross Margin has been stable in the last couple of years.
| 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
- 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
- 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 3.56. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
- IBM has a Altman-Z score (3.56) which is in line with 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.
- Looking at the Debt to FCF ratio, with a value of 5.27, IBM is in line with its industry, outperforming 52.27% of the companies in the same industry.
- IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
- The Debt to Equity ratio of IBM (1.98) is worse than 73.86% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.56 |
ROIC/WACC0.92
WACC8.79%
2.3 Liquidity
- IBM has a Current Ratio of 0.93. 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 0.93, IBM is doing worse than 80.68% of the companies in the same industry.
- A Quick Ratio of 0.89 indicates that IBM may have some problems paying its short term obligations.
- IBM's Quick ratio of 0.89 is on the low side compared to the rest of the industry. IBM is outperformed by 81.82% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 6.71% over the past year.
- The Earnings Per Share has been decreasing by -4.21% on average over the past years.
- The Revenue has been growing slightly by 4.51% in the past 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)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
- IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.07% yearly.
- IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.12% yearly.
EPS Next Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
EPS Next 5Y6.07%
Revenue Next Year6.82%
Revenue Next 2Y5.75%
Revenue Next 3Y5.24%
Revenue Next 5Y5.12%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- 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
- Based on the Price/Earnings ratio of 27.86, the valuation of IBM can be described as expensive.
- The rest of the industry has a similar Price/Earnings ratio as IBM.
- When comparing the Price/Earnings ratio of IBM to the average of the S&P500 Index (27.38), we can say IBM is valued inline with the index average.
- With a Price/Forward Earnings ratio of 24.82, IBM is valued on the expensive side.
- IBM's Price/Forward Earnings ratio is in line with the industry average.
- When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (24.29), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.86 | ||
| Fwd PE | 24.82 |
4.2 Price Multiples
- IBM's Enterprise Value to EBITDA ratio is in line with the industry average.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of IBM is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.87 | ||
| EV/EBITDA | 21.55 |
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)2.51
PEG (5Y)N/A
EPS Next 2Y9.19%
EPS Next 3Y8.11%
5. Dividend
5.1 Amount
- IBM has a Yearly Dividend Yield of 2.26%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 0.43, IBM pays a better dividend. On top of this IBM pays more dividend than 92.05% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.84, IBM pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.26% |
5.2 History
- The dividend of IBM has a limited annual growth rate of 0.81%.
- IBM has paid a dividend for at least 10 years, which is a reliable track record.
- IBM has decreased its dividend in the last 3 years.
Dividend Growth(5Y)0.81%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
- 78.75% 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.
DP78.75%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
305.67
+7.72 (+2.59%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)10-22 2025-10-22/amc
Earnings (Next)01-28 2026-01-28/amc
Inst Owners64.18%
Inst Owner Change-0.02%
Ins Owners0.09%
Ins Owner Change-1.55%
Market Cap285.72B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price Target299.53 (-2.01%)
Short Float %2.12%
Short Ratio3.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.26% |
Yearly Dividend6.68
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years2
Div Non Decr Years2
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)2.8%
PT rev (3m)6.74%
EPS NQ rev (1m)-0.34%
EPS NQ rev (3m)-0.31%
EPS NY rev (1m)0%
EPS NY rev (3m)2.07%
Revenue NQ rev (1m)-0.02%
Revenue NQ rev (3m)0.19%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.41%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.86 | ||
| Fwd PE | 24.82 | ||
| P/S | 4.37 | ||
| P/FCF | 23.87 | ||
| P/OCF | 21.19 | ||
| P/B | 10.24 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.55 |
EPS(TTM)10.97
EY3.59%
EPS(NY)12.32
Fwd EY4.03%
FCF(TTM)12.81
FCFY4.19%
OCF(TTM)14.42
OCFY4.72%
SpS69.97
BVpS29.85
TBVpS-54.8
PEG (NY)2.51
PEG (5Y)N/A
Graham Number85.84
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 | 3.56 |
F-Score6
WACC8.79%
ROIC/WACC0.92
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 Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
EPS Next 5Y6.07%
Revenue 1Y (TTM)4.51%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%9.11%
Revenue Next Year6.82%
Revenue Next 2Y5.75%
Revenue Next 3Y5.24%
Revenue Next 5Y5.12%
EBIT growth 1Y14.74%
EBIT growth 3Y13.97%
EBIT growth 5Y1.98%
EBIT Next Year73.84%
EBIT Next 3Y24.02%
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 FAQ
What is the fundamental rating for IBM stock?
ChartMill assigns a fundamental rating of 4 / 10 to IBM.
What is the valuation status of INTL BUSINESS MACHINES CORP (IBM) stock?
ChartMill assigns a valuation rating of 2 / 10 to INTL BUSINESS MACHINES CORP (IBM). This can be considered as Overvalued.
How profitable is INTL BUSINESS MACHINES CORP (IBM) stock?
INTL BUSINESS MACHINES CORP (IBM) has a profitability rating of 7 / 10.
What are the PE and PB ratios of INTL BUSINESS MACHINES CORP (IBM) stock?
The Price/Earnings (PE) ratio for INTL BUSINESS MACHINES CORP (IBM) is 27.86 and the Price/Book (PB) ratio is 10.24.
Can you provide the financial health for IBM stock?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM) is 2 / 10.