IBMIBM
US • TECHNOLOGY
$214.19
P/E
19.02
PEG
1.99
FCF Yield
6.8%
Rev Growth YoY
+1.1% YoY
Gross Margin
58.1%
Health Score
8/10
D/E Ratio
1.88
Confidence
MEDIUM
Business Snapshot
IBM is a global technology company operating in the information technology services industry, generating its primary revenue through hybrid cloud platforms, artificial intelligence solutions, and consulting services. The company competes as a large-cap dominant player in enterprise IT, with a significant presence across cloud computing, data analytics, and cybersecurity domains. With a market capitalization of $194.69 billion and trailing twelve-month revenue of $69.09 billion, IBM represents one of the largest publicly traded technology service providers globally. The company's defining characteristic is its deeply entrenched enterprise client base and recurring revenue from maintenance and cloud contracts, providing a relatively stable financial foundation amid industry shifts.
Financial Health
IBM's gross margin of 58.1%, while without a prior-year comparison in the data, is coupled with a net margin of 15.5%, indicating a solid ability to convert revenue into profit after operating expenses. The balance sheet shows a debt-to-equity ratio of 1.88x, which is elevated but manageable given the company's consistent cash generation, though the current ratio of 0.96x suggests the company's short-term assets do not fully cover its near-term liabilities...
Risk Assessment
- DEBT / LIQUIDITY — Debt/equity of 1.88x is elevated and the current ratio of 0.96x indicates short-term liabilities exceed liquid assets, potentially limiting financial flexibility.
- 52-WEEK POSITION — The current price of $214.19 is well below the midpoint of the 52-week range ($265.83 is the [(332.46 + 199.19)/2]), and represents a 35.6% decline from the 52-week high of $332.46.
- TECHNICALS — Price below 200-day MA of $272.42 — established downtrend.
- EARNINGS QUALITY — Earnings growth declined by 1.8% year-over-year, indicating that revenue growth of 1.1% is not translating into improving bottom-line results.
- VALUATION DIVERGENCE — FMP DCF fair value is not available, preventing a cross-check against the Python DCF estimate of $294.2, which carries high sensitivity to the terminal growth rate....
IBM's gross margin of 58.1%, while without a prior-year comparison in the data, is coupled with a net margin of 15.5%, indicating a solid ability to convert revenue into profit after operating expenses. The balance sheet shows a debt-to-equity ratio of 1.88x, which is elevated but manageable given the company's consistent cash generation, though the current ratio of 0.96x suggests the company's short-term assets do not fully cover its near-term liabilities. Free cash flow stands at a robust $13.19 billion, translating to an attractive free cash flow yield of 6.8%, demonstrating the company's strong capacity to generate cash after capital expenditures. Overall, IBM exhibits healthy financial health characterized by strong cash generation and profitability, supporting its ability to fund dividends and reinvest in growth initiatives despite a leveraged balance sheet.
- DEBT / LIQUIDITY — Debt/equity of 1.88x is elevated and the current ratio of 0.96x indicates short-term liabilities exceed liquid assets, potentially limiting financial flexibility. - 52-WEEK POSITION — The current price of $214.19 is well below the midpoint of the 52-week range ($265.83 is the [(332.46 + 199.19)/2]), and represents a 35.6% decline from the 52-week high of $332.46. - TECHNICALS — Price below 200-day MA of $272.42 — established downtrend. - EARNINGS QUALITY — Earnings growth declined by 1.8% year-over-year, indicating that revenue growth of 1.1% is not translating into improving bottom-line results. - VALUATION DIVERGENCE — FMP DCF fair value is not available, preventing a cross-check against the Python DCF estimate of $294.2, which carries high sensitivity to the terminal growth rate.
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