INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
USA - NYSE:IBM - US4592001014 - Common Stock
288.37 USD
+1.65 (+0.58%)
288.38 USD
0.01 (0%)
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 87 industry peers in the IT Services industry. While IBM belongs to the best of the industry regarding profitability, there are concerns on its financial health. IBM is valied quite expensively at the moment, while it does show a decent 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.
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 Return On Assets of 3.93%. This is in the better half of the industry: IBM outperforms 65.52% of its industry peers.
IBM has a Return On Equity of 21.20%. This is amongst the best in the industry. IBM outperforms 86.21% of its industry peers.
The Return On Invested Capital of IBM (7.55%) is better than 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 21.42%.
The last Return On Invested Capital (7.55%) for IBM is above the 3 year average (7.26%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 21.2% | ||
| ROIC | 7.55% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.26%
ROIC(5y)6.26%
1.3 Margins
IBM has a better Profit Margin (9.11%) than 77.01% of its industry peers.
In the last couple of years the Profit Margin of IBM has declined.
IBM has a Operating Margin of 15.32%. This is amongst the best in the industry. IBM outperforms 81.61% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
The Gross Margin of IBM (57.57%) is better than 78.16% 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 Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.32% | ||
| PM (TTM) | 9.11% | ||
| GM | 57.57% |
OM growth 3Y13.36%
OM growth 5Y1.77%
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.
IBM has more shares outstanding than it did 5 years ago.
IBM has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 3.38 indicates that IBM is not in any danger for bankruptcy at the moment.
With a Altman-Z score value of 3.38, IBM perfoms like the industry average, outperforming 57.47% of the companies in the same industry.
The Debt to FCF ratio of IBM is 5.46, which is a neutral value as it means it would take IBM, 5.46 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 5.46, IBM is in line with its industry, outperforming 56.32% of the companies in the same industry.
IBM has a Debt/Equity ratio of 2.01. This is a high value indicating a heavy dependency on external financing.
IBM has a worse Debt to Equity ratio (2.01) than 78.16% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.38 |
ROIC/WACC0.83
WACC9.15%
2.3 Liquidity
A Current Ratio of 0.91 indicates that IBM may have some problems paying its short term obligations.
IBM's Current ratio of 0.91 is on the low side compared to the rest of the industry. IBM is outperformed by 82.76% of its industry peers.
IBM has a Quick Ratio of 0.91. 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 0.87. This is amonst the worse of the industry: IBM underperforms 82.76% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 |
3. Growth
3.1 Past
IBM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 4.32%.
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 2.69% 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)4.32%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.23%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
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 6.21% on average per year.
The Revenue is expected to grow by 4.94% on average over the next years.
EPS Next Y8.85%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y6.21%
Revenue Next Year6.38%
Revenue Next 2Y5.37%
Revenue Next 3Y5.04%
Revenue Next 5Y4.94%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
IBM is valuated quite expensively with a Price/Earnings ratio of 27.15.
IBM's Price/Earnings ratio is in line with the industry average.
The average S&P500 Price/Earnings ratio is at 27.86. IBM is around the same levels.
Based on the Price/Forward Earnings ratio of 23.97, the valuation of IBM can be described as rather expensive.
IBM's Price/Forward Earnings is on the same level as the industry average.
IBM's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 23.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.15 | ||
| Fwd PE | 23.97 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA ratio is in line with the industry average.
Based on the Price/Free Cash Flow ratio, IBM is valued a bit cheaper than the industry average as 60.92% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.85 | ||
| EV/EBITDA | 21.45 |
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)3.07
PEG (5Y)N/A
EPS Next 2Y7.92%
EPS Next 3Y7.16%
5. Dividend
5.1 Amount
IBM has a Yearly Dividend Yield of 2.34%.
Compared to an average industry Dividend Yield of 2.48, IBM pays a better dividend. On top of this IBM pays more dividend than 90.80% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.44, IBM has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
5.2 History
The dividend of IBM has a limited annual growth rate of 0.83%.
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)0.83%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
106.31% of the earnings are spent on dividend by IBM. This is not a sustainable payout ratio.
The dividend of IBM is growing, but earnings are growing more, so the dividend growth is sustainable.
DP106.31%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
288.37
+1.65 (+0.58%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.04%
Inst Owner Change-1.18%
Ins Owners0.09%
Ins Owner Change0.85%
Market Cap268.62B
Analysts69.63
Price Target280.62 (-2.69%)
Short Float %1.57%
Short Ratio2.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.34% |
Yearly Dividend6.68
Dividend Growth(5Y)0.83%
DP106.31%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.93%
Min EPS beat(2)4.89%
Max EPS beat(2)12.97%
EPS beat(4)4
Avg EPS beat(4)5.93%
Min EPS beat(4)2.27%
Max EPS beat(4)12.97%
EPS beat(8)8
Avg EPS beat(8)5.15%
EPS beat(12)11
Avg EPS beat(12)4.65%
EPS beat(16)14
Avg EPS beat(16)3.57%
Revenue beat(2)2
Avg Revenue beat(2)0.68%
Min Revenue beat(2)0.01%
Max Revenue beat(2)1.34%
Revenue beat(4)2
Avg Revenue beat(4)-0.31%
Min Revenue beat(4)-1.66%
Max Revenue beat(4)1.34%
Revenue beat(8)2
Avg Revenue beat(8)-0.52%
Revenue beat(12)4
Avg Revenue beat(12)-0.27%
Revenue beat(16)7
Avg Revenue beat(16)-1.44%
PT rev (1m)-0.02%
PT rev (3m)7.97%
EPS NQ rev (1m)0.1%
EPS NQ rev (3m)-0.18%
EPS NY rev (1m)0.17%
EPS NY rev (3m)1.89%
Revenue NQ rev (1m)0.01%
Revenue NQ rev (3m)0.25%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.83%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.15 | ||
| Fwd PE | 23.97 | ||
| P/S | 4.19 | ||
| P/FCF | 22.85 | ||
| P/OCF | 20.22 | ||
| P/B | 9.76 | ||
| P/tB | N/A | ||
| EV/EBITDA | 21.45 |
EPS(TTM)10.62
EY3.68%
EPS(NY)12.03
Fwd EY4.17%
FCF(TTM)12.62
FCFY4.38%
OCF(TTM)14.26
OCFY4.94%
SpS68.75
BVpS29.53
TBVpS-56.09
PEG (NY)3.07
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.93% | ||
| ROE | 21.2% | ||
| ROCE | 8.85% | ||
| ROIC | 7.55% | ||
| ROICexc | 8.78% | ||
| ROICexgc | 53.5% | ||
| OM | 15.32% | ||
| PM (TTM) | 9.11% | ||
| GM | 57.57% | ||
| FCFM | 18.36% |
ROA(3y)3.74%
ROA(5y)3.83%
ROE(3y)20.94%
ROE(5y)24.07%
ROIC(3y)7.26%
ROIC(5y)6.26%
ROICexc(3y)8.29%
ROICexc(5y)7.07%
ROICexgc(3y)40.75%
ROICexgc(5y)31.79%
ROCE(3y)8.5%
ROCE(5y)7.33%
ROICexcg growth 3Y26.58%
ROICexcg growth 5Y17.04%
ROICexc growth 3Y17.55%
ROICexc growth 5Y7.25%
OM growth 3Y13.36%
OM growth 5Y1.77%
PM growth 3Y-1.4%
PM growth 5Y-10.1%
GM growth 3Y1.05%
GM growth 5Y0.73%
F-Score5
Asset Turnover0.43
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Debt/EBITDA | 3.77 | ||
| Cap/Depr | 31.62% | ||
| Cap/Sales | 2.38% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 90.78% | ||
| Profit Quality | 201.58% | ||
| Current Ratio | 0.91 | ||
| Quick Ratio | 0.87 | ||
| Altman-Z | 3.38 |
F-Score5
WACC9.15%
ROIC/WACC0.83
Cap/Depr(3y)35.46%
Cap/Depr(5y)39.55%
Cap/Sales(3y)2.66%
Cap/Sales(5y)3.73%
Profit Quality(3y)294.17%
Profit Quality(5y)264.98%
High Growth Momentum
Growth
EPS 1Y (TTM)4.32%
EPS 3Y1.19%
EPS 5Y-4.21%
EPS Q2Q%15.23%
EPS Next Y8.85%
EPS Next 2Y7.92%
EPS Next 3Y7.16%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.38%
Revenue Next 2Y5.37%
Revenue Next 3Y5.04%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.33%
EBIT Next 3Y25.44%
EBIT Next 5Y19.31%
FCF growth 1Y14.17%
FCF growth 3Y7.1%
FCF growth 5Y0.76%
OCF growth 1Y8.18%
OCF growth 3Y1.67%
OCF growth 5Y-1.86%