NYSE:IBM

Stock Analysis Report

International Business Machines

Executive Summary

International Business Machines Corporation operates as an integrated technology and services company worldwide.

Rewards

Trading at 42% below its fair value

Earnings are forecast to grow 8.32% per year

Earnings grew by 35% over the past year

Pays a high and reliable dividend of 4.77%

Risk Analysis

Has a high level of debt



Snowflake Analysis

6 star dividend payer and good value.


Similar Companies

Share Price & News

How has International Business Machines's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: IBM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.2%

IBM

3.4%

US IT

2.0%

US Market


1 Year Return

11.7%

IBM

40.9%

US IT

23.5%

US Market

Return vs Industry: IBM underperformed the US IT industry which returned 39.9% over the past year.

Return vs Market: IBM underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

IBMIndustryMarket
7 Day1.2%3.4%2.0%
30 Day2.9%7.2%4.3%
90 Day3.1%14.5%12.2%
1 Year17.1%11.7%42.3%40.9%26.1%23.5%
3 Year-7.7%-18.9%110.1%101.1%53.1%43.2%
5 Year8.2%-11.3%153.5%131.0%75.5%56.1%

Price Volatility Vs. Market

How volatile is International Business Machines's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is International Business Machines undervalued compared to its fair value and its price relative to the market?

41.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: IBM ($135.82) is trading below our estimate of fair value ($234.17)

Significantly Below Fair Value: IBM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: IBM is good value based on its PE Ratio (15.7x) compared to the IT industry average (32x).

PE vs Market: IBM is good value based on its PE Ratio (15.7x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: IBM is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: IBM is overvalued based on its PB Ratio (6.7x) compared to the US IT industry average (4.2x).


Next Steps

Future Growth

How is International Business Machines forecast to perform in the next 1 to 3 years based on estimates from 19 analysts?

8.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: IBM's forecast earnings growth (8.3% per year) is above the savings rate (1.7%).

Earnings vs Market: IBM's earnings (8.3% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: IBM's earnings are forecast to grow, but not significantly.

Revenue vs Market: IBM's revenue (2% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: IBM's revenue (2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: IBM's Return on Equity is forecast to be very high in 3 years time (43.3%).


Next Steps

Past Performance

How has International Business Machines performed over the past 5 years?

-18.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: IBM has high quality earnings.

Growing Profit Margin: IBM's current net profit margins (10%) are higher than last year (7.1%).


Past Earnings Growth Analysis

Earnings Trend: IBM's earnings have declined by -18.4% per year over the past 5 years.

Accelerating Growth: IBM's earnings growth over the past year (35%) exceeds its 5-year average (-18.4% per year).

Earnings vs Industry: IBM earnings growth over the past year (35%) exceeded the IT industry 16.2%.


Return on Equity

High ROE: Whilst IBM's Return on Equity (42.66%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is International Business Machines's financial position?


Financial Position Analysis

Short Term Liabilities: IBM's short term assets ($38.1B) exceed its short term liabilities ($35.1B).

Long Term Liabilities: IBM's short term assets ($38.1B) do not cover its long term liabilities ($96.5B).


Debt to Equity History and Analysis

Debt Level: IBM's debt to equity ratio (365.7%) is considered high.

Reducing Debt: IBM's debt to equity ratio has increased from 317.7% to 365.7% over the past 5 years.

Debt Coverage: IBM's debt is well covered by operating cash flow (23.3%).

Interest Coverage: IBM's interest payments on its debt are well covered by EBIT (13.8x coverage).


Balance Sheet

Inventory Level: IBM has a low level of unsold assets or inventory.

Debt Coverage by Assets: IBM's debt is not covered by short term assets (assets are 0.6x debt).


Next Steps

Dividend

What is International Business Machines's current dividend yield, its reliability and sustainability?

4.69%

Current Dividend Yield


Dividend Yield vs Market

company4.7%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years4.8%

Current dividend yield vs market & industry

Notable Dividend: IBM's dividend (4.77%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: IBM's dividend (4.77%) is in the top 25% of dividend payers in the US market (3.66%)


Stability and Growth of Payments

Stable Dividend: IBM's dividends per share have been stable in the past 10 years.

Growing Dividend: IBM's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (73.6%), IBM's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: IBM's dividends in 3 years are forecast to be well covered by earnings (44.4% payout ratio).


Next Steps

Management

What is the CEO of International Business Machines's salary, the management and board of directors tenure and is there insider trading?

5.0yrs

Average management tenure


CEO

Ginni Rometty (60yo)

8yrs

Tenure

US$17,552,218

Compensation

Ms. Virginia M. Rometty, also known as Ginni, has been the Chairman of International Business Machines Corporation (also known as IBM Corp.) since October 1, 2012 and also has been its Chief Executive Offi ...


CEO Compensation Analysis

Compensation vs Market: Ginni's total compensation ($USD17.55M) is above average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Ginni's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.0yrs

Average Tenure

55yo

Average Age

Experienced Management: IBM's management team is seasoned and experienced (5 years average tenure).


Board Age and Tenure

7.6yrs

Average Tenure

62yo

Average Age

Experienced Board: IBM's board of directors are considered experienced (7.6 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$300,97917 Jun 19
Kenneth Keverian
EntityIndividual
Shares2,227
Max PriceUS$135.15
SellUS$364,49512 Jun 19
Kenneth Keverian
EntityIndividual
Shares2,690
Max PriceUS$135.50
SellUS$274,95605 Jun 19
Kenneth Keverian
EntityIndividual
Shares2,083
Max PriceUS$132.00
SellUS$16,75808 Mar 19
Robert Del Bene
EntityIndividual
Shares123.67
Max PriceUS$135.51
SellUS$1,807,09304 Mar 19
Erich Clementi
EntityIndividual
Shares13,000
Max PriceUS$139.06
SellUS$272,99014 Feb 19
Diane Gherson
EntityIndividual
Role
Head of Human Resources
Senior VP & Chief Human Resources Officer
Shares1,989
Max PriceUS$137.25
SellUS$780,62506 Feb 19
Diane Gherson
EntityIndividual
Role
Head of Human Resources
Senior VP & Chief Human Resources Officer
Shares5,754
Max PriceUS$136.05

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Michelle Peluso (47yo)

    Senior VP of Digital Sales & Chief Marketing Officer

    • Tenure: 1yrs
  • John Kelly (65yo)

    Executive Vice President

    • Tenure: 20yrs
    • Compensation: US$6.42m
  • Michelle Browdy (54yo)

    Senior VP of Legal & Regulatory Affairs and General Counsel

    • Tenure: 5yrs
  • Ginni Rometty (60yo)

    Chairman

    • Tenure: 8yrs
    • Compensation: US$17.55m
  • Martin Schroeter (55yo)

    Senior VP of IBM Global Markets Global Financing

    • Tenure: 6yrs
    • Compensation: US$7.03m
  • James Kavanaugh (52yo)

    Senior VP & CFO

    • Tenure: 2yrs
    • Compensation: US$5.90m
  • Patricia Murphy

    Vice President of Investor Relations

    • Diane Gherson (61yo)

      Senior VP & Chief Human Resources Officer

      • Tenure: 1.8yrs
    • Kevin Reardon

      Vice President of Corporate Development

      • Fletcher Previn

        Chief Information Officer


        Board Members

        • Mike Eskew (69yo)

          Lead Director

          • Compensation: US$564.70k
        • David Farr (64yo)

          Independent Director

          • Tenure: 8yrs
          • Compensation: US$378.49k
        • Sidney Taurel (70yo)

          Independent Director

          • Tenure: 19yrs
          • Compensation: US$547.72k
        • Shirley Jackson (72yo)

          Independent Director

          • Tenure: 14.3yrs
          • Compensation: US$511.42k
        • Andrew Liveris (64yo)

          Independent Director

          • Tenure: 9.9yrs
          • Compensation: US$420.26k
        • Alex Gorsky (59yo)

          Independent Director

          • Tenure: 5.3yrs
          • Compensation: US$375.90k
        • Ginni Rometty (60yo)

          Chairman

          • Tenure: 8yrs
          • Compensation: US$17.55m
        • Liming Chen (59yo)

          Chairman of Greater China Group

          • Tom Rosamilia (58yo)

            Senior VP of IBM Systems & Chairman of North America

            • Tenure: 0.9yrs
          • Martin Jetter (60yo)

            Senior VP & Chairman of IBM Europe

            • Tenure: 1yrs
            • Compensation: US$8.51m

          Company Information

          International Business Machines Corporation's company bio, employee growth, exchange listings and data sources


          Key Information

          • Name: International Business Machines Corporation
          • Ticker: IBM
          • Exchange: NYSE
          • Founded: 1911
          • Industry: IT Consulting and Other Services
          • Sector: Software
          • Market Cap: US$122.200b
          • Shares outstanding: 885.64m
          • Website: https://www.ibm.com

          Number of Employees


          Location

          • International Business Machines Corporation
          • 1 New Orchard Road
          • Armonk
          • New York
          • 10504
          • United States

          Listings

          TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
          IBMDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1968
          IBMNYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1968
          IBMLSE (London Stock Exchange)YesCommon StockGBUSDJan 1968
          IBMBVL (Bolsa de Valores de Lima)YesCommon StockPEUSDJan 1968
          IBM *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJan 1968
          IBMSWX (SIX Swiss Exchange)YesCommon StockCHCHFJan 1968
          IBM-UETLX (Eurotlx)YesCommon StockITEURJan 1968
          IBMWBAG (Wiener Boerse AG)YesCommon StockATEURJan 1968
          IBMXTRA (XETRA Trading Platform)YesCommon StockDEEURJan 1968
          IBMSNSE (Santiago Stock Exchange)YesCommon StockCLUSDJan 1968
          IBMAENXTBR (Euronext Brussels)YesCommon StockBEUSDJan 1968
          IBMBASE (Buenos Aires Stock Exchange)CEDEAR 5 REP 1 COM STK USD0.2ARARSJul 2001
          IBMB34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EA REPR 1 COM SHSBRBRLNov 2011

          Biography

          International Business Machines Corporation operates as an integrated technology and services company worldwide. Its Cognitive Solutions segment offers a portfolio of enterprise artificial intelligence platforms, such as analytics and data management platforms, cloud data services, talent management, and industry solutions primarily under the Watson Platform, Watson Health, and Watson Internet of Things names. This segment also offers transaction processing software for use in banking, airlines, and retail industries. The company’s Global Business Services segment offers business consulting services; delivers system integration, application management, maintenance, and support services for packaged software applications; and finance, procurement, talent and engagement, and industry-specific business process outsourcing services. Its Technology Services & Cloud Platforms segment provides project, managed, outsourcing, and cloud-delivered services for enterprise IT infrastructure environments; technical, and software and solution support services; and integration software solutions. The company’s Systems segment offers servers for businesses, cloud service providers, and scientific computing organizations; data storage products and solutions; and z/OS, an enterprise operating system. Its Global Financing segment provides lease, installment payment plans, and loan financing services; short-term working capital financing to suppliers, distributors, and resellers; and remanufacturing and remarketing services. The company serves financial services institutions, airlines, manufacturers, and consumer goods and retail companies. International Business Machines Corporation has a strategic partnership with Cloudera to develop joint go-to-market programs. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. The company was incorporated in 1911 and is headquartered in Armonk, New York. 


          Company Analysis and Financial Data Status

          All financial data provided by Standard & Poor's Capital IQ.
          DataLast Updated (UTC time)
          Company Analysis2020/01/17 23:37
          End of Day Share Price2020/01/17 00:00
          Earnings2019/09/30
          Annual Earnings2018/12/31


          Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.