INTL BUSINESS MACHINES CORP (IBM)
US4592001014 - Common Stock
Overall IBM gets a fundamental rating of 4 out of 10. We evaluated IBM against 86 industry peers in the IT Services industry. IBM has an excellent profitability rating, but there are concerns on its financial health. IBM has a correct valuation and a medium growth rate.
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.
IBM had positive earnings in each of the past 5 years.
IBM had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
IBM has a better Return On Assets (5.55%) than 71.43% of its industry peers.
Looking at the Return On Equity, with a value of 33.29%, IBM belongs to the top of the industry, outperforming 96.43% of the companies in the same industry.
IBM's Return On Invested Capital of 7.64% is fine compared to the rest of the industry. IBM outperforms 66.67% of its industry peers.
The Average Return On Invested Capital over the past 3 years for IBM is significantly below the industry average of 12.84%.
The last Return On Invested Capital (7.64%) for IBM is above the 3 year average (6.57%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.55% | ||
| ROE | 33.29% | ||
| ROIC | 7.64% |
ROA(3y)3.73%
ROA(5y)4.19%
ROE(3y)23.72%
ROE(5y)28.71%
ROIC(3y)6.57%
ROIC(5y)5.99%
1.3 Margins
IBM has a better Profit Margin (12.13%) than 86.90% of its industry peers.
IBM's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 14.64%, IBM is doing good in the industry, outperforming 79.76% of the companies in the same industry.
In the last couple of years the Operating Margin of IBM has declined.
IBM has a better Gross Margin (55.45%) than 76.19% of its industry peers.
IBM's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.64% | ||
| PM (TTM) | 12.13% | ||
| GM | 55.45% |
OM growth 3Y12.1%
OM growth 5Y-3.59%
PM growth 3Y6.18%
PM growth 5Y2.03%
GM growth 3Y-0.29%
GM growth 5Y3.62%
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.
The number of shares outstanding for IBM has been increased compared to 5 years ago.
IBM has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.12 indicates that IBM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.12, IBM is in the better half of the industry, outperforming 63.10% of the companies in the same industry.
IBM has a debt to FCF ratio of 4.67. This is a neutral value as IBM would need 4.67 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.67, IBM is in line with its industry, outperforming 53.57% of the companies in the same industry.
A Debt/Equity ratio of 2.22 is on the high side and indicates that IBM has dependencies on debt financing.
IBM has a worse Debt to Equity ratio (2.22) than 78.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.22 | ||
| Debt/FCF | 4.67 | ||
| Altman-Z | 3.12 |
ROIC/WACC0.75
WACC10.21%
2.3 Liquidity
IBM has a Current Ratio of 0.96. 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 0.96. This is in the lower half of the industry: IBM underperforms 73.81% of its industry peers.
IBM has a Quick Ratio of 0.96. 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 0.93, IBM is doing worse than 72.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.96 | ||
| Quick Ratio | 0.93 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.37%.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -7.01% yearly.
Looking at the last year, IBM shows a small growth in Revenue. The Revenue has grown by 2.20% in the last year.
IBM shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -4.92% yearly.
EPS 1Y (TTM)5.37%
EPS 3Y3.49%
EPS 5Y-7.01%
EPS growth Q2Q7.5%
Revenue 1Y (TTM)2.2%
Revenue growth 3Y3.88%
Revenue growth 5Y-4.92%
Revenue growth Q2Q4.14%
3.2 Future
IBM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.05% yearly.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.48% yearly.
EPS Next Y6.16%
EPS Next 2Y5.9%
EPS Next 3Y5.7%
EPS Next 5Y8.05%
Revenue Next Year3.28%
Revenue Next 2Y3.92%
Revenue Next 3Y4.21%
Revenue Next 5Y4.48%
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
A Price/Earnings ratio of 18.96 indicates a rather expensive valuation of IBM.
Based on the Price/Earnings ratio, IBM is valued a bit cheaper than 67.86% of the companies in the same industry.
IBM's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.20.
A Price/Forward Earnings ratio of 17.86 indicates a rather expensive valuation of IBM.
Based on the Price/Forward Earnings ratio, IBM is valued a bit cheaper than 71.43% of the companies in the same industry.
IBM's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 21.60.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.96 | ||
| Fwd PE | 17.86 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as IBM.
80.95% of the companies in the same industry are more expensive than IBM, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 13.78 | ||
| EV/EBITDA | 15.57 |
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)3.08
PEG (5Y)N/A
EPS Next 2Y5.9%
EPS Next 3Y5.7%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 3.66%. 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 2.76. IBM pays more dividend than 96.43% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.45, IBM pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.66% |
5.2 History
The dividend of IBM has a limited annual growth rate of 1.21%.
IBM has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of IBM decreased recently.
Dividend Growth(5Y)1.21%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
80.51% 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.
DP80.51%
EPS Next 2Y5.9%
EPS Next 3Y5.7%
INTL BUSINESS MACHINES CORP
NYSE:IBM (4/23/2024, 4:43:35 PM)
After market: 183.89 +1.7 (+0.93%)182.19
+0.29 (+0.16%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap167.02B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.66% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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Revenue beat(2)
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PT rev (1m)
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EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.96 | ||
| Fwd PE | 17.86 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.08
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.55% | ||
| ROE | 33.29% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 14.64% | ||
| PM (TTM) | 12.13% | ||
| GM | 55.45% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.46
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.22 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.96 | ||
| Quick Ratio | 0.93 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)5.37%
EPS 3Y3.49%
EPS 5Y
EPS growth Q2Q
EPS Next Y6.16%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)2.2%
Revenue growth 3Y3.88%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y