It hasn't been a great evening session for International Business Machines investors, who have watched their shares sink by -2.7% to a price of $223.53. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
a Very Low P/E Ratio but Trading Above Its Fair Price:
International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 30.44 and an average price to book (P/B) ratio of 4.19. In contrast, International Business Machines has a trailing 12 month P/E ratio of 19.8 and a P/B ratio of 6.37.
International Business Machines's PEG ratio is 2.15, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Wider Gross Margins Than the Industry Average of 32.44%:
| 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $55,179 | $57,350 | $60,530 | $61,860 | $62,753 | $67,535 |
| Gross Margins | 56% | 55% | 54% | 55% | 56% | 57% |
| Net Margins | 10% | 10% | 3% | 12% | 10% | 16% |
| Net Income (M) | $5,590 | $5,743 | $1,639 | $7,502 | $6,023 | $10,593 |
| Net Interest Expense (M) | $1,288 | $1,155 | $1,216 | $1,607 | $1,712 | $1,935 |
| Depreciation & Amort. (M) | $4,227 | $3,888 | $2,407 | $2,109 | $2,168 | $2,284 |
| Diluted Shares (M) | 897 | 905 | 912 | 922 | 937 | 949 |
| Earnings Per Share | $6.23 | $6.35 | $1.8 | $8.14 | $6.43 | $11.17 |
| EPS Growth | n/a | 1.93% | -71.65% | 352.22% | -21.01% | 73.72% |
| Avg. Price | $102.36 | $116.9 | $125.08 | $163.55 | $218.71 | $229.76 |
| P/E Ratio | 16.3 | 18.24 | 68.73 | 19.87 | 33.49 | 20.23 |
| Free Cash Flow (M) | $15,579 | $10,734 | $9,089 | $12,686 | $12,397 | $12,102 |
| CAPEX (M) | $2,618 | $2,062 | $1,346 | $1,245 | $1,048 | $1,091 |
| EV / EBITDA | 20.47 | 17.14 | 43.66 | 17.76 | 30.32 | 20.16 |
| Total Debt (M) | $61,400 | $51,704 | $50,949 | $56,547 | $54,973 | $54,836 |
| Net Debt / EBITDA | 7.09 | 5.16 | 12.09 | 4.03 | 5.15 | 3.27 |
| Current Ratio | 0.98 | 0.88 | 0.92 | 0.96 | 1.04 | 0.96 |
