INTL BUSINESS MACHINES CORP (IBM) Fundamental Analysis & Valuation

NYSE:IBM • US4592001014

256.55 USD
+6.49 (+2.6%)
At close: Mar 5, 2026
257 USD
+0.45 (+0.18%)
After Hours: 3/5/2026, 7:36:41 PM
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This IBM fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.

Fundamental Rating

5

We assign a fundamental rating of 5 out of 10 to IBM. IBM was compared to 86 industry peers in the IT Services industry. While IBM has a great profitability rating, there are quite some concerns on its financial health. IBM is quite expensive at the moment. It does show a decent growth rate.


Dividend Valuation Growth Profitability Health

8

1. IBM Profitability Analysis

1.1 Basic Checks

  • In the past year IBM was profitable.
  • In the past year IBM had a positive cash flow from operations.
  • 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.
IBM Yearly Net Income VS EBIT VS OCF VS FCFIBM Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5B 10B 15B

1.2 Ratios

  • IBM has a Return On Assets of 6.97%. This is in the better half of the industry: IBM outperforms 72.09% of its industry peers.
  • The Return On Equity of IBM (32.45%) is better than 90.70% of its industry peers.
  • Looking at the Return On Invested Capital, with a value of 7.68%, IBM is in the better half of the industry, outperforming 68.60% of the companies in the same industry.
  • IBM had an Average Return On Invested Capital over the past 3 years of 7.08%. This is below the industry average of 10.85%.
  • The 3 year average ROIC (7.08%) for IBM is below the current ROIC(7.68%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 6.97%
ROE 32.45%
ROIC 7.68%
ROA(3y)5.64%
ROA(5y)4.51%
ROE(3y)29.27%
ROE(5y)25.13%
ROIC(3y)7.08%
ROIC(5y)6.41%
IBM Yearly ROA, ROE, ROICIBM Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 20 40 60

1.3 Margins

  • IBM's Profit Margin of 15.69% is amongst the best of the industry. IBM outperforms 91.86% of its industry peers.
  • IBM's Profit Margin has improved in the last couple of years.
  • IBM has a better Operating Margin (16.30%) than 87.21% of its industry peers.
  • IBM's Operating Margin has improved in the last couple of years.
  • IBM has a Gross Margin of 58.19%. This is amongst the best in the industry. IBM outperforms 80.23% of its industry peers.
  • In the last couple of years the Gross Margin of IBM has remained more or less at the same level.
Industry RankSector Rank
OM 16.3%
PM (TTM) 15.69%
GM 58.19%
OM growth 3Y10.55%
OM growth 5Y8.93%
PM growth 3Y79.59%
PM growth 5Y9.14%
GM growth 3Y2.52%
GM growth 5Y0.79%
IBM Yearly Profit, Operating, Gross MarginsIBM Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10 20 30 40 50

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2

2. IBM Health Analysis

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 is higher compared to a year ago.
IBM Yearly Shares OutstandingIBM Yearly Shares OutstandingYearly Shares Outstanding 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 200M 400M 600M 800M
IBM Yearly Total Debt VS Total AssetsIBM Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 50B 100B 150B

2.2 Solvency

  • An Altman-Z score of 3.28 indicates that IBM is not in any danger for bankruptcy at the moment.
  • IBM has a Altman-Z score of 3.28. This is in the better half of the industry: IBM outperforms 61.63% of its industry peers.
  • The Debt to FCF ratio of IBM is 5.29, which is a neutral value as it means it would take IBM, 5.29 years of fcf income to pay off all of its debts.
  • Looking at the Debt to FCF ratio, with a value of 5.29, IBM is in line with its industry, outperforming 54.65% of the companies in the same industry.
  • A Debt/Equity ratio of 1.68 is on the high side and indicates that IBM has dependencies on debt financing.
  • With a Debt to Equity ratio value of 1.68, IBM is not doing good in the industry: 73.26% of the companies in the same industry are doing better.
Industry RankSector Rank
Debt/Equity 1.68
Debt/FCF 5.29
Altman-Z 3.28
ROIC/WACC0.86
WACC8.89%
IBM Yearly LT Debt VS Equity VS FCFIBM Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10B 20B 30B 40B 50B

2.3 Liquidity

  • A Current Ratio of 0.96 indicates that IBM may have some problems paying its short term obligations.
  • Looking at the Current ratio, with a value of 0.96, IBM is doing worse than 81.40% of the companies in the same industry.
  • 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.
  • IBM has a worse Quick ratio (0.92) than 81.40% of its industry peers.
Industry RankSector Rank
Current Ratio 0.96
Quick Ratio 0.92
IBM Yearly Current Assets VS Current LiabilitesIBM Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 10B 20B 30B 40B

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WACCDebt/EquityHow to determine the health of a companyAltman-Z scoreShow peers with great health

5

3. IBM Growth Analysis

3.1 Past

  • IBM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.00%, which is quite good.
  • IBM shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 5.94% yearly.
  • IBM shows a small growth in Revenue. In the last year, the Revenue has grown by 7.62%.
  • The Revenue has been growing slightly by 4.12% on average over the past years.
EPS 1Y (TTM)12%
EPS 3Y8.25%
EPS 5Y5.94%
EPS Q2Q%15.31%
Revenue 1Y (TTM)7.62%
Revenue growth 3Y3.72%
Revenue growth 5Y4.12%
Sales Q2Q%12.15%

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 11.08% yearly.
  • IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.87% yearly.
EPS Next Y8.56%
EPS Next 2Y8.43%
EPS Next 3Y9.11%
EPS Next 5Y11.08%
Revenue Next Year6.15%
Revenue Next 2Y5.37%
Revenue Next 3Y5.33%
Revenue Next 5Y5.87%

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.
IBM Yearly Revenue VS EstimatesIBM Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 20B 40B 60B 80B 100B
IBM Yearly EPS VS EstimatesIBM Yearly EPS VS EstimatesYearly EPS VS Estimates 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 5 10 15 20 25

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3

4. IBM Valuation Analysis

4.1 Price/Earnings Ratio

  • IBM is valuated rather expensively with a Price/Earnings ratio of 22.17.
  • 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 (26.74), we can say IBM is valued inline with the index average.
  • The Price/Forward Earnings ratio is 20.42, which indicates a rather expensive current valuation of IBM.
  • IBM's Price/Forward Earnings is on the same level as the industry average.
  • When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (24.82), we can say IBM is valued inline with the index average.
Industry RankSector Rank
PE 22.17
Fwd PE 20.42
IBM Price Earnings VS Forward Price EarningsIBM Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

4.2 Price Multiples

  • The rest of the industry has a similar Enterprise Value to EBITDA ratio as IBM.
  • The rest of the industry has a similar Price/Free Cash Flow ratio as IBM.
Industry RankSector Rank
P/FCF 20.72
EV/EBITDA 17.45
IBM Per share dataIBM EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 20 -20 40 -40 60

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 excellent profitability rating of IBM may justify a higher PE ratio.
PEG (NY)2.59
PEG (5Y)3.73
EPS Next 2Y8.43%
EPS Next 3Y9.11%

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6

5. IBM Dividend Analysis

5.1 Amount

  • IBM has a Yearly Dividend Yield of 2.78%. Purely for dividend investing, there may be better candidates out there.
  • Compared to an average industry Dividend Yield of 0.93, IBM pays a better dividend. On top of this IBM pays more dividend than 90.70% of the companies listed in the same industry.
  • Compared to an average S&P500 Dividend Yield of 1.82, IBM pays a better dividend.
Industry RankSector Rank
Dividend Yield 2.78%

5.2 History

  • The dividend of IBM has a limited annual growth rate of 0.63%.
  • 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)0.63%
Div Incr Years2
Div Non Decr Years2
IBM Yearly Dividends per shareIBM Yearly Dividends per shareYearly Dividends per share 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2 4 6 8 10

5.3 Sustainability

  • 59.05% of the earnings are spent on dividend by IBM. This is a bit on the high side, but may be sustainable.
  • IBM's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP59.05%
EPS Next 2Y8.43%
EPS Next 3Y9.11%
IBM Yearly Income VS Free CF VS DividendIBM Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5B 10B
IBM Dividend Payout.IBM Dividend Payout, showing the Payout Ratio.IBM Dividend Payout.PayoutRetained Earnings

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IBM Fundamentals: All Metrics, Ratios and Statistics

INTL BUSINESS MACHINES CORP

NYSE:IBM (3/5/2026, 7:36:41 PM)

After market: 257 +0.45 (+0.18%)

256.55

+6.49 (+2.6%)

Chartmill FA Rating
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)01-28
Earnings (Next)04-22
Inst Owners64.18%
Inst Owner Change2.66%
Ins Owners0.09%
Ins Owner Change6.75%
Market Cap239.81B
Revenue(TTM)67.53B
Net Income(TTM)10.59B
Analysts73.33
Price Target320.34 (24.86%)
Short Float %2.11%
Short Ratio3.48
Dividend
Industry RankSector Rank
Dividend Yield 2.78%
Yearly Dividend6.72
Dividend Growth(5Y)0.63%
DP59.05%
Div Incr Years2
Div Non Decr Years2
Ex-Date02-10
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.44%
Min EPS beat(2)3.6%
Max EPS beat(2)7.28%
EPS beat(4)4
Avg EPS beat(4)7.19%
Min EPS beat(4)3.6%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)6.03%
EPS beat(12)12
Avg EPS beat(12)5.55%
EPS beat(16)15
Avg EPS beat(16)4.22%
Revenue beat(2)2
Avg Revenue beat(2)0.94%
Min Revenue beat(2)0.5%
Max Revenue beat(2)1.37%
Revenue beat(4)4
Avg Revenue beat(4)0.81%
Min Revenue beat(4)0.01%
Max Revenue beat(4)1.37%
Revenue beat(8)4
Avg Revenue beat(8)-0.12%
Revenue beat(12)4
Avg Revenue beat(12)-0.46%
Revenue beat(16)8
Avg Revenue beat(16)0.09%
PT rev (1m)6.95%
PT rev (3m)11.93%
EPS NQ rev (1m)-2.85%
EPS NQ rev (3m)-3.78%
EPS NY rev (1m)1.96%
EPS NY rev (3m)2.32%
Revenue NQ rev (1m)0.54%
Revenue NQ rev (3m)0.35%
Revenue NY rev (1m)1.46%
Revenue NY rev (3m)1.56%
Valuation
Industry RankSector Rank
PE 22.17
Fwd PE 20.42
P/S 3.55
P/FCF 20.72
P/OCF 18.18
P/B 7.35
P/tB N/A
EV/EBITDA 17.45
EPS(TTM)11.57
EY4.51%
EPS(NY)12.56
Fwd EY4.9%
FCF(TTM)12.38
FCFY4.83%
OCF(TTM)14.11
OCFY5.5%
SpS72.25
BVpS34.93
TBVpS-49.7
PEG (NY)2.59
PEG (5Y)3.73
Graham Number95.35
Profitability
Industry RankSector Rank
ROA 6.97%
ROE 32.45%
ROCE 9.72%
ROIC 7.68%
ROICexc 8.8%
ROICexgc 44.15%
OM 16.3%
PM (TTM) 15.69%
GM 58.19%
FCFM 17.14%
ROA(3y)5.64%
ROA(5y)4.51%
ROE(3y)29.27%
ROE(5y)25.13%
ROIC(3y)7.08%
ROIC(5y)6.41%
ROICexc(3y)8.17%
ROICexc(5y)7.26%
ROICexgc(3y)41.61%
ROICexgc(5y)34.84%
ROCE(3y)8.97%
ROCE(5y)8.11%
ROICexgc growth 3Y15%
ROICexgc growth 5Y27.2%
ROICexc growth 3Y9.9%
ROICexc growth 5Y14.25%
OM growth 3Y10.55%
OM growth 5Y8.93%
PM growth 3Y79.59%
PM growth 5Y9.14%
GM growth 3Y2.52%
GM growth 5Y0.79%
F-Score6
Asset Turnover0.44
Health
Industry RankSector Rank
Debt/Equity 1.68
Debt/FCF 5.29
Debt/EBITDA 3.42
Cap/Depr 32.2%
Cap/Sales 2.39%
Interest Coverage 250
Cash Conversion 82.3%
Profit Quality 109.28%
Current Ratio 0.96
Quick Ratio 0.92
Altman-Z 3.28
F-Score6
WACC8.89%
ROIC/WACC0.86
Cap/Depr(3y)36.49%
Cap/Depr(5y)38.74%
Cap/Sales(3y)2.67%
Cap/Sales(5y)3.22%
Profit Quality(3y)155.37%
Profit Quality(5y)231.43%
High Growth Momentum
Growth
EPS 1Y (TTM)12%
EPS 3Y8.25%
EPS 5Y5.94%
EPS Q2Q%15.31%
EPS Next Y8.56%
EPS Next 2Y8.43%
EPS Next 3Y9.11%
EPS Next 5Y11.08%
Revenue 1Y (TTM)7.62%
Revenue growth 3Y3.72%
Revenue growth 5Y4.12%
Sales Q2Q%12.15%
Revenue Next Year6.15%
Revenue Next 2Y5.37%
Revenue Next 3Y5.33%
Revenue Next 5Y5.87%
EBIT growth 1Y20.21%
EBIT growth 3Y14.66%
EBIT growth 5Y13.42%
EBIT Next Year50.69%
EBIT Next 3Y18.76%
EBIT Next 5Y16.19%
FCF growth 1Y-1.57%
FCF growth 3Y11%
FCF growth 5Y-5.01%
OCF growth 1Y-1.88%
OCF growth 3Y8.13%
OCF growth 5Y-6.23%

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 of INTL BUSINESS MACHINES CORP (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 8 / 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 22.17 and the Price/Book (PB) ratio is 7.35.


Can you provide the financial health for IBM stock?

The financial health rating of INTL BUSINESS MACHINES CORP (IBM) is 2 / 10.