IBMNEUTRAL

IBM P/E Ratio Analysis

18.7x

Higher than 9% of TECHNOLOGY sector peers

Updated 77h ago·SEC filings & market data

Key Takeaway

The P/E ratio of 18.7x means investors pay $18.70 for every $1 of the company's annual earnings, a standard measure of how expensive a stock is.

Sector Performance

9th percentile

IBM

18.7x

Sector Median

39.5x

Sector Avg

41.3x

Prior Period

24.6x(Jul 2026)

↑ Improving

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Deep Analysis

The P/E ratio of 18.7x means investors pay $18.70 for every $1 of the company's annual earnings, a standard measure of how expensive a stock is.

At 18.7x, IBM trades well below the sector median of 39.5x, placing it in the 9th percentile among its technology peers—cheaper than roughly 91% of them. The year-over-year change is N/A and the trend over the last 8 quarters is N/A, but the quarter-over-quarter change shows a decrease of 23.8%, from 24.6x to 18.7x. This combination—a low P/E relative to peers alongside a sharp quarterly decline—could signal an opportunity if earnings are rising or price is falling, but it also means the market is demanding a lower multiple for reasons that need scrutiny. The low absolute level and discount to the sector suggest limited downside from valuation, yet the declining trend introduces uncertainty about whether that discount will persist. Overall, this metric leans supportive of the NEUTRAL verdict, as the cheap valuation offers some cushion but the compression does not clearly justify an upgrade to bullish.

Frequently Asked Questions

What does the P/E Ratio tell investors about IBM?

Measures how much investors pay per dollar of earnings. A high P/E signals growth expectations; a low P/E may indicate undervaluation or slow growth.

How is the P/E Ratio calculated?

P/E Ratio is calculated as: Price / EPS.

How does IBM's P/E Ratio compare to its sector?

IBM's P/E Ratio of 18.7x compares to a TECHNOLOGY sector median of 39.5x, placing it in the 9th percentile.

Who are IBM's closest peers by P/E Ratio?

The closest TECHNOLOGY peers by P/E Ratio include: CSCO (37.1x), TXN (42.0x), HPE (43.8x), DELL (34.2x), LRCX (52.7x).

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The Formula

Price / EPS

Why It Matters

Measures how much investors pay per dollar of earnings. A high P/E signals growth expectations; a low P/E may indicate undervaluation or slow growth.