INTL BUSINESS MACHINES CORP (IBM) Stock Fundamental Analysis
NYSE:IBM - US4592001014 - Common Stock
242.09 USD
+2.69 (+1.12%)
242.38 USD
+0.29 (+0.12%)
Taking everything into account, IBM scores 4 out of 10 in our fundamental rating. IBM was compared to 83 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.
1. Profitability
1.1 Basic Checks
In the past year IBM was profitable.
In the past year IBM had a positive cash flow from operations.
In the past 5 years IBM has always been profitable.
In the past 5 years IBM always reported a positive cash flow from operatings.
1.2 Ratios
IBM's Return On Assets of 3.93% is fine compared to the rest of the industry. IBM outperforms 65.06% of its industry peers.
IBM's Return On Equity of 21.20% is amongst the best of the industry. IBM outperforms 86.75% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.55%, IBM is in the better half of the industry, outperforming 67.47% of the companies in the same industry.
IBM had an Average Return On Invested Capital over the past 3 years of 7.26%. This is significantly below the industry average of 22.12%.
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 77.11% of its industry peers.
IBM's Profit Margin has declined in the last couple of years.
IBM has a Operating Margin of 15.32%. This is amongst the best in the industry. IBM outperforms 81.93% of its industry peers.
IBM's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 57.57%, IBM is in the better half of the industry, outperforming 78.31% 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 | 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
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), IBM is destroying value.
Compared to 1 year ago, IBM has more shares outstanding
Compared to 5 years ago, IBM has more shares outstanding
Compared to 1 year ago, IBM has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 3.16 indicates that IBM is not in any danger for bankruptcy at the moment.
The Altman-Z score of IBM (3.16) is comparable to the rest of the industry.
IBM has a debt to FCF ratio of 5.46. This is a neutral value as IBM would need 5.46 years to pay back of all of its debts.
With a Debt to FCF ratio value of 5.46, IBM perfoms like the industry average, outperforming 55.42% of the companies in the same industry.
A Debt/Equity ratio of 2.01 is on the high side and indicates that IBM has dependencies on debt financing.
The Debt to Equity ratio of IBM (2.01) is worse than 78.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.01 | ||
| Debt/FCF | 5.46 | ||
| Altman-Z | 3.16 |
ROIC/WACC0.81
WACC9.28%
2.3 Liquidity
IBM has a Current 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.
With a Current ratio value of 0.91, IBM is not doing good in the industry: 81.93% of the companies in the same industry are doing better.
A Quick Ratio of 0.87 indicates that IBM may have some problems paying its short term obligations.
With a Quick ratio value of 0.87, IBM is not doing good in the industry: 81.93% of the companies in the same industry are doing better.
| 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%.
Measured over the past years, IBM shows a decrease in Earnings Per Share. The EPS has been decreasing by -4.21% on average per year.
The Revenue has been growing slightly by 2.69% 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)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
The Earnings Per Share is expected to grow by 6.21% on average over the next years.
IBM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.94% yearly.
EPS Next Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
Revenue Next 5Y4.94%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
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 rather expensively with a Price/Earnings ratio of 22.80.
60.24% of the companies in the same industry are more expensive than IBM, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of IBM to the average of the S&P500 Index (27.24), we can say IBM is valued inline with the index average.
A Price/Forward Earnings ratio of 20.20 indicates a rather expensive valuation of IBM.
The rest of the industry has a similar Price/Forward Earnings ratio as IBM.
When comparing the Price/Forward Earnings ratio of IBM to the average of the S&P500 Index (22.81), we can say IBM is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.8 | ||
| Fwd PE | 20.2 |
4.2 Price Multiples
IBM's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of IBM indicates a somewhat cheap valuation: IBM is cheaper than 71.08% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.18 | ||
| EV/EBITDA | 18.5 |
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)2.63
PEG (5Y)N/A
EPS Next 2Y7.71%
EPS Next 3Y6.93%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.81%, IBM has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.44, IBM pays a better dividend. On top of this IBM pays more dividend than 95.18% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, IBM pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.81% |
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 2Y7.71%
EPS Next 3Y6.93%
242.09
+2.69 (+1.12%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)
Earnings (Next)
Inst Owners65.2%
Inst Owner Change-1.2%
Ins Owners0.09%
Ins Owner Change-0.66%
Market Cap225.51B
Analysts71.11
Price Target280.67 (15.94%)
Short Float %1.68%
Short Ratio3.16
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.81% |
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)3.83%
PT rev (3m)10.08%
EPS NQ rev (1m)0.2%
EPS NQ rev (3m)-1.32%
EPS NY rev (1m)1.96%
EPS NY rev (3m)1.68%
Revenue NQ rev (1m)0.16%
Revenue NQ rev (3m)2.89%
Revenue NY rev (1m)0.84%
Revenue NY rev (3m)0.98%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.8 | ||
| Fwd PE | 20.2 | ||
| P/S | 3.52 | ||
| P/FCF | 19.18 | ||
| P/OCF | 16.98 | ||
| P/B | 8.2 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.5 |
EPS(TTM)10.62
EY4.39%
EPS(NY)11.99
Fwd EY4.95%
FCF(TTM)12.62
FCFY5.21%
OCF(TTM)14.26
OCFY5.89%
SpS68.75
BVpS29.53
TBVpS-56.09
PEG (NY)2.63
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 | 3.16 |
F-Score5
WACC9.28%
ROIC/WACC0.81
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 Y8.66%
EPS Next 2Y7.71%
EPS Next 3Y6.93%
EPS Next 5Y6.21%
Revenue 1Y (TTM)2.69%
Revenue growth 3Y3.05%
Revenue growth 5Y1.69%
Sales Q2Q%7.65%
Revenue Next Year6.36%
Revenue Next 2Y5.36%
Revenue Next 3Y5.02%
Revenue Next 5Y4.94%
EBIT growth 1Y8.54%
EBIT growth 3Y16.81%
EBIT growth 5Y3.49%
EBIT Next Year72.78%
EBIT Next 3Y26.23%
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%