At US$128, Is International Business Machines Corporation (NYSE:IBM) Worth Looking At Closely?

Today we're going to take a look at the well-established International Business Machines Corporation (NYSE:IBM). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$146 at one point, and dropping to the lows of US$123. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether International Business Machines' current trading price of US$128 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at International Business Machines’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for International Business Machines

What Is International Business Machines Worth?

According to my valuation model, International Business Machines seems to be fairly priced at around 14% below my intrinsic value, which means if you buy International Business Machines today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $149.49, then there’s not much of an upside to gain from mispricing. Furthermore, International Business Machines’s low beta implies that the stock is less volatile than the wider market.

What kind of growth will International Business Machines generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for International Business Machines. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? IBM’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on IBM, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that International Business Machines has 5 warning signs and it would be unwise to ignore them.

If you are no longer interested in International Business Machines, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.