What Are the Fundamentals Of IBM?

Now trading at a price of $164.03, International Business Machines has moved -0.4% so far today.

International Business Machines returned gains of 9.9% last year, with its stock price reaching a high of $166.34 and a low of $120.55. Over the same period, the stock underperformed the S&P 500 index by -6.3%. As of April 2023, the company's 50-day average price was $148.58. International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. Based in Armonk, NY, the large-cap Technology company has 288,300 full time employees. International Business Machines has offered a 4.0% dividend yield over the last 12 months.

The Company's Revenues Are Declining:

2018 2019 2020 2021 2022 2023
Revenue (MM) $79,591 $57,714 $55,179 $57,350 $60,530 $61,170
Revenue Growth n/a -27.49% -4.39% 3.93% 5.54% 1.06%
Operating Margins 14% 12% 7% 8% 3% 13%
Net Margins 11% 16% 10% 10% 3% 12%
Net Income (MM) $8,728 $9,431 $5,590 $5,743 $1,783 $7,099
Net Interest Expense (MM) $1,482 $1,956 $1,830 $1,550 $1,566 $1,860
Depreciation & Amort. (MM) $3,127 $4,209 $4,227 $3,888 $2,407 $2,243
Earnings Per Share $9.52 $10.56 $6.23 $6.35 $1.8 $7.569999999999999
EPS Growth n/a 10.92% -41.0% 1.93% -71.65% 320.56%
Diluted Shares (MM) 916 893 897 905 912 949
Free Cash Flow (MM) $11,852 $12,484 $15,579 $10,734 $9,089 $12,079
Capital Expenditures (MM) $3,395 $2,286 $2,618 $2,062 $1,346 $1,354
Current Ratio 1.29 1.02 0.98 0.88 0.92 0.91
Total Debt (MM) $52,863 $73,194 $64,467 $59,404 $48,939 $50,927
Net Debt / EBITDA 2.85 5.68 6.23 6.01 9.77 4.16

International Business Machines suffers from weak revenue growth and decreasing reinvestment in the business, weak operating margins with a stable trend, and declining EPS growth. The firm's financial statements also exhibit irregular cash flows and a highly leveraged balance sheet.

A Lower P/E Ratio Than Its Sector Average but Trades Above Its Graham Number:

International Business Machines has a trailing twelve month P/E ratio of 19.1, compared to an average of 35.0 for the Technology sector. Based on its EPS guidance of $9.27, the company has a forward P/E ratio of 16.0. The -0.4% compound average growth rate of International Business Machines's historical and projected earnings per share yields a PEG ratio of -50.46. This indicates that its shares are overvalued.In contrast, the market is likely undervaluing International Business Machines in terms of its equity because its P/B ratio is 6.49 while the sector average is 7.92. The company's shares are currently trading 153.9% above their Graham number.

International Business Machines Has an Analyst Consensus that Shares Are Overpriced:

The 14 analysts following International Business Machines have set target prices ranging from $102.17 to $166.25 per share, for an average of $137.93 with a buy rating. As of April 2023, the company is trading 7.7% away from its average target price, indicating that there is an analyst belief that shares are overpriced.

International Business Machines has an average amount of shares sold short because 3.0% of the company's shares are sold short. Institutions own 59.4% of the company's shares, and the insider ownership rate stands at 0.09%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $13,463,171,070.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.