INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - NYSE:IBM - US4592001014 - Common Stock
288.53 USD
-1.42 (-0.49%)
293.8 USD
+5.27 (+1.83%)
IBM gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 85 industry peers in the IT Services industry. IBM has an excellent profitability rating, 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
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
The Return On Assets of IBM (5.40%) is better than 68.24% of its industry peers.
With an excellent Return On Equity value of 28.34%, IBM belongs to the best of the industry, outperforming 90.59% of the companies in the same industry.
IBM has a better Return On Invested Capital (8.07%) than 65.88% of its industry peers.
IBM had an Average Return On Invested Capital over the past 3 years of 7.07%. This is significantly below the industry average of 30.25%.
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
IBM has a Profit Margin of 12.09%. This is amongst the best in the industry. IBM outperforms 84.71% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
IBM has a better Operating Margin (16.06%) than 83.53% 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 77.65% 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.
The number of shares outstanding for IBM has been increased compared to 1 year ago.
The number of shares outstanding for IBM has been increased compared to 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 3.48. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM has a Altman-Z score of 3.48. This is in the better half of the industry: IBM outperforms 62.35% 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 comparable to the rest of the industry.
A Debt/Equity ratio of 1.98 is on the high side and indicates that IBM has dependencies on debt financing.
IBM's Debt to Equity ratio of 1.98 is on the low side compared to the rest of the industry. IBM is outperformed by 76.47% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.48 |
ROIC/WACC0.97
WACC8.3%
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.
The Current ratio of IBM (0.93) is worse than 80.00% of its industry peers.
IBM has a Quick 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 Quick ratio, with a value of 0.89, IBM is doing worse than 80.00% of the companies in the same industry.
| 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.
IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 4.51%.
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
IBM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.07% yearly.
The Revenue is expected to grow by 5.12% on average over the next years.
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
With a Price/Earnings ratio of 26.30, IBM can be considered very expensive at the moment.
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 25.47, which is the current average of the S&P500 Index.
IBM is valuated rather expensively with a Price/Forward Earnings ratio of 23.50.
IBM's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 35.42. IBM is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.3 | ||
| Fwd PE | 23.5 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA ratio is in line with the industry average.
IBM's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.45 | ||
| EV/EBITDA | 20.45 |
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)2.36
PEG (5Y)N/A
EPS Next 2Y9.01%
EPS Next 3Y7.8%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.20%. Purely for dividend investing, there may be better candidates out there.
IBM's Dividend Yield is rather good when compared to the industry average which is at 2.00. IBM pays more dividend than 91.76% of the companies in the same industry.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.81%.
IBM has been paying a dividend for at least 10 years, so it has 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
IBM pays out 78.75% 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.
DP78.75%
EPS Next 2Y9.01%
EPS Next 3Y7.8%
288.53
-1.42 (-0.49%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.04%
Inst Owner Change-0.54%
Ins Owners0.09%
Ins Owner Change-1.47%
Market Cap268.77B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts70.37
Price Target286.2 (-0.81%)
Short Float %1.94%
Short Ratio3.19
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.2% |
Yearly Dividend6.68
Dividend Growth(5Y)0.81%
DP78.75%
Div Incr Years2
Div Non Decr Years2
Ex-Date
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)1.99%
PT rev (3m)2.46%
EPS NQ rev (1m)-0.01%
EPS NQ rev (3m)-0.04%
EPS NY rev (1m)2.1%
EPS NY rev (3m)4.28%
Revenue NQ rev (1m)0.21%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)0.42%
Revenue NY rev (3m)0.74%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.3 | ||
| Fwd PE | 23.5 | ||
| P/S | 4.11 | ||
| P/FCF | 22.45 | ||
| P/OCF | 19.93 | ||
| P/B | 9.63 | ||
| P/tB | N/A | ||
| EV/EBITDA | 20.45 |
EPS(TTM)10.97
EY3.8%
EPS(NY)12.28
Fwd EY4.25%
FCF(TTM)12.85
FCFY4.45%
OCF(TTM)14.47
OCFY5.02%
SpS70.21
BVpS29.96
TBVpS-54.99
PEG (NY)2.36
PEG (5Y)N/A
Graham Number85.99
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 | 3.48 |
F-Score6
WACC8.3%
ROIC/WACC0.97
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 FAQ
What is the fundamental rating for IBM stock?
ChartMill assigns a fundamental rating of 5 / 10 to IBM.
What is the valuation status for IBM stock?
ChartMill assigns a valuation rating of 3 / 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.
How financially healthy is INTL BUSINESS MACHINES CORP?
The financial health rating of INTL BUSINESS MACHINES CORP (IBM) is 3 / 10.
Is the dividend of INTL BUSINESS MACHINES CORP sustainable?
The dividend rating of INTL BUSINESS MACHINES CORP (IBM) is 5 / 10 and the dividend payout ratio is 78.75%.