International Business Machines Stock Analysis, Valuation (NYSE:IBM)

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$145.13 $0.13 (0.09%) IBM stock closing price Sep 22, 2017 (Closing)
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International Business Machines
Updated on : Sep 22, 2017
previous close
IBM 145.1 (0%)
NASDAQ 6426.9 (0%)
Closing Price On: Sep 22, 2017
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Computer-Integrated Systems
Sector :
Computer and Technology
5 Quarter Revenue
Revenue Growth
Compared to the industry
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5 Year CAGR:
Operating Profit
Operating Margin:
Sector Average:
5 Quarter Net Profit
Net Margins
LTM Margin
Compared to the industry
Debt/Equity Ratio
Debt/Equity Ratio:
Compared to the industry
Cash Flow
Operating cash flow:
Net Income:
Dividend Yield
IBM dividend yield:
Operating Margins
Net Margins
FCF Margin
PE Valuation
Recent Growth
Long Term Growth
High Debt Burden
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
Industry PS :
Sector:   Computer and Technology.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
Return on Equity:
Free Cash Flow Margin:
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IBM Stock Analysis

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In our IBM stock analysis we look at the financial aspect of the business. However any analysis within the technology space needs to look at how the tech space is changing for the business itself. IBM industry analysis shows that the firm is facing increasing pressure from new competitors. The biggest competition is faced within GBS and GTS division which together contributes a major part of IBM revenue.

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International Business Machines Corp. Stock Rating 3.6/5

Our International Business Machines stock opinion is based on fundamentals of the company. This International Business Machines stock analysis is based on latest 2017 Q2 earnings. The stock price analysis takes into account the company's valuation metrics.

Should you buy IBM stock?

  • International Business Machines had a healthy average operating margin of 13.5% over the last 4 quarters.
  • Net margins stood at a healthy 14.6% (average) for International Business Machines in the Trailing Twelve Months.
  • The price to earnings multiple of 10.6 is attractive when compared with the industry average PE ratio of 26.
  • When compared with the Computer-Integrated Systems industry average PS ratio of 2.7, the price-to-sales ratio of 1.7 for IBM stock is attractive.
  • International Business Machines has an attractive ROIC (Return on Invested Capital) of 13.3%
  • International Business Machines has a good Return On Equity (ROE) of 64.7%.
  • International Business Machines has a healthy FCF (Free Cash Flow) margin of 14.8%.

Should you sell IBM stock?

  • International Business Machines sales declined by -4.7% year on year in 2017 Q2.
  • The company saw an average annual sales decline of -5.9% in sales over the last 5 years.
  • With a debt/equity ratio of  2.46, International Business Machines is highly leveraged in comparison to Computer and Technology peers.

Comments on this video and International Business Machines stock

IBM stock history shows a constant bullish trend in the last decade which finally ended with last quarter results. IBM analysis reveals a huge change in the way technology is used by IBM’s clients. More and more firms are shifting towards cloud computing and are looking for cost saving in their IT budget. This increasing commoditization of IT services will impact IBM the most as it contributes to a majority of its revenues. The firm still has a huge pool of resources to bank on. IBM assets are in excess of $120 billion and IBM company analysis shows that the firm still produces a huge pile of free cash flow.

However these resources must be judiciously used. Financial analysis of IBM reveals that most of the EPS growth was due to share repurchases. Instead of doing this the firm can invest in newer technologies or make better acquisitions. IBM stock analysis in 2013 was mostly swayed by the healthy EPS growth on the back of share repurchases however in depth IBM market analysis shows that the profit margins of the firm are increasingly getting squeezed with few growth verticals. This is the reason why IBM PE ratio chart shows a PE ratio of only 10.5 for a firm which is raking in more than $100 billion in revenues and which invests over $6 billion in R&D.