INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:IBM - US4592001014 - Common Stock
312.67 USD
+2.19 (+0.71%)
312.5 USD
-0.17 (-0.05%)
We assign a fundamental rating of 4 out of 10 to IBM. IBM was compared to 85 industry peers in the IT Services industry. While IBM has a great profitability rating, there are quite some 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.
Each year in the past 5 years IBM had a positive operating cash flow.
1.2 Ratios
IBM has a better Return On Assets (5.40%) than 68.24% of its industry peers.
The Return On Equity of IBM (28.34%) is better than 89.41% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.07%, IBM is in the better half of the industry, outperforming 69.41% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for IBM is significantly below the industry average of 29.59%.
The 3 year average ROIC (7.07%) for IBM is below the current ROIC(8.07%), indicating increased profibility in the last year.
| 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 83.53% 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 83.53% of its industry peers.
In the last couple of years the Operating Margin of IBM has remained more or less at the same level.
Looking at the Gross Margin, with a value of 57.81%, IBM is in the better half of the industry, outperforming 78.82% of the companies in the same industry.
In the last couple of years the Gross Margin of IBM has remained more or less at the same level.
| 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), IBM is destroying value.
The number of shares outstanding for IBM has been increased compared to 1 year ago.
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 3.59. This indicates that IBM is financially healthy and has little risk of bankruptcy at the moment.
IBM's Altman-Z score of 3.59 is fine compared to the rest of the industry. IBM outperforms 61.18% of its industry peers.
IBM has a debt to FCF ratio of 5.27. This is a neutral value as IBM would need 5.27 years to pay back of all of its debts.
IBM has a Debt to FCF ratio (5.27) which is comparable to the rest of the industry.
IBM has a Debt/Equity ratio of 1.98. This is a high value indicating a heavy dependency on external financing.
IBM has a worse Debt to Equity ratio (1.98) than 77.65% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.98 | ||
| Debt/FCF | 5.27 | ||
| Altman-Z | 3.59 |
ROIC/WACC0.95
WACC8.52%
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.
With a Current ratio value of 0.93, IBM is not doing good in the industry: 82.35% of the companies in the same industry are doing better.
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.
IBM has a Quick ratio of 0.89. This is amonst the worse of the industry: IBM underperforms 83.53% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.89 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 6.71%.
IBM shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.21% yearly.
The Revenue has been growing slightly by 4.51% in the past 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)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
Based on estimates for the next years, IBM will show a small growth in Earnings Per Share. The EPS will grow by 6.07% on average per year.
The Revenue is expected to grow by 5.12% on average over the next years.
EPS Next Y11.1%
EPS Next 2Y9.19%
EPS Next 3Y8.11%
EPS Next 5Y6.07%
Revenue Next Year6.83%
Revenue Next 2Y5.7%
Revenue Next 3Y5.23%
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
IBM is valuated quite expensively with a Price/Earnings ratio of 28.50.
IBM's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 26.59. IBM is around the same levels.
With a Price/Forward Earnings ratio of 25.39, IBM can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Forward Earnings ratio of IBM is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 23.80. IBM is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.5 | ||
| Fwd PE | 25.39 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of IBM is on the same level as its industry peers.
The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.41 | ||
| EV/EBITDA | 21.85 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
IBM has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2.57
PEG (5Y)N/A
EPS Next 2Y9.19%
EPS Next 3Y8.11%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.18%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 1.95, IBM pays a better dividend. On top of this IBM pays more dividend than 91.76% of the companies listed in the same industry.
IBM's Dividend Yield is comparable with the S&P500 average which is at 2.31.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.18% |
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
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 2Y9.19%
EPS Next 3Y8.11%
312.67
+2.19 (+0.71%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners64.13%
Inst Owner Change-0.36%
Ins Owners0.09%
Ins Owner Change-0.73%
Market Cap292.27B
Revenue(TTM)65.40B
Net Income(TTM)7.91B
Analysts71.85
Price Target291.37 (-6.81%)
Short Float %1.99%
Short Ratio3.37
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.18% |
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)1.8%
PT rev (3m)3.93%
EPS NQ rev (1m)0.04%
EPS NQ rev (3m)0%
EPS NY rev (1m)-0.03%
EPS NY rev (3m)2.25%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.11%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.44%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.5 | ||
| Fwd PE | 25.39 | ||
| P/S | 4.47 | ||
| P/FCF | 24.41 | ||
| P/OCF | 21.68 | ||
| P/B | 10.47 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.85 |
EPS(TTM)10.97
EY3.51%
EPS(NY)12.32
Fwd EY3.94%
FCF(TTM)12.81
FCFY4.1%
OCF(TTM)14.42
OCFY4.61%
SpS69.97
BVpS29.85
TBVpS-54.8
PEG (NY)2.57
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 | 3.59 |
F-Score6
WACC8.52%
ROIC/WACC0.95
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 Year6.83%
Revenue Next 2Y5.7%
Revenue Next 3Y5.23%
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 for 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.
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%.