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International Business Machines Corp IBM

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$167.67 −16.40 (8.91%)
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IBM Earnings: Kicks Off 2024 With Strong Financial Results and Deal to Buy HashiCorp

Malik Ahmed Khan

We are maintaining our $139 fair value estimate for narrow-moat IBM after the firm started 2024 on the right foot, with solid first-quarter sales and profitability, and reaffirmed its guidance for the remaining three quarters of the year. IBM also announced its intention to acquire HashiCorp for roughly $6.4 billion in an all-cash deal. While this acquisition does not affect our IBM valuation, we think HashiCorp's cloud infrastructure software has synergies with IBM’s existing products, especially Red Hat.

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Price vs Fair Value

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IBM is trading within a range we consider fairly valued.
Price
$182.19
Fair Value
$373.00
Uncertainty
Medium
1-Star Price
$284.58
5-Star Price
$83.60
Economic Moat
Jfhyw
Capital Allocation
Lvtc

Bulls Say, Bears Say

Bulls

IBM’s customers prove to be even stickier than expected, still placing emphasis on the mission criticality of mainframes, databases, and choosing not to rock the boat even on ancillary applications, as a result.

Bears

Even IBM’s stickiest customers find it worth it to switch to IBM competitors in software and cloud offerings and, in turn, minimize the size of IBM’s IT services accounts.

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Trading Information

Previous Close Price
$184.07
Day Range
$167.07–171.64
52-Week Range
$120.55–199.13
Bid/Ask
$167.55 / $167.79
Market Cap
$154.65 Bil
Volume/Avg
377,491 / 4.3 Mil

Key Statistics

Price/Earnings (Normalized)
18.93
Price/Sales
2.71
Dividend Yield (Trailing)
3.61%
Dividend Yield (Forward)
3.61%
Total Yield
3.89%

Company Profile

IBM looks to be a part of every aspect of an enterprise’s IT needs. The company primarily sells software, IT services, consulting, and hardware. IBM operates in 175 countries and employs approximately 350,000 people. The company has a robust roster of 80,000 business partners to service 5,200 clients—which includes 95% of all Fortune 500. While IBM is a B2B company, IBM’s outward impact is substantial. For example, IBM manages 90% of all credit card transactions globally and is responsible for 50% of all wireless connections in the world.
Sector
Technology
Industry
Information Technology Services
Stock Style Box
Large Value
Total Number of Employees
282,200
Website
http://www.ibm.com

Competitors

Valuation

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Metric
IBM
MSFT
ACN
Price/Earnings (Normalized)
 18.9336.9926.26
Price/Book Value
 7.3912.767.81
Price/Sales
 2.7113.423.10
Price/Cash Flow
 14.2829.2418.63
Price/Earnings
IBM
MSFT
ACN

Financial Strength

Metric
IBM
MSFT
ACN
Quick Ratio
 0.801.021.13
Current Ratio
 0.961.221.26
Interest Coverage
 5.9941.49168.58
Quick Ratio
IBM
MSFT
ACN

Profitability

Metric
IBM
MSFT
ACN
Return on Assets (Normalized)
 6.74%19.91%17.18%
Return on Equity (Normalized)
 39.82%39.57%36.65%
Return on Invested Capital (Normalized)
 11.92%29.21%28.45%
Return on Assets
IBM
MSFT
ACN
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Information Technology Services Industry Comparables

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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
ACN
Accenture PLC Class AYprwrjkhXsnl$197.1 Bil
FI
Fiserv IncJnscrdgNqrrsc$89.6 Bil
INFY
Infosys Ltd ADRYcqvgslRppjg$70.3 Bil
FIS
Fidelity National Information Services IncKzcwxjxnQnymtfj$40.8 Bil
CTSH
Cognizant Technology Solutions Corp Class ALcqywhncJpqsxgj$33.6 Bil
WIT
Wipro Ltd ADRBlzvtrqWmzbbgd$27.7 Bil
GIB
CGI Inc Class AByzymsvjPmzzl$24.5 Bil
BR
Broadridge Financial Solutions IncMrynggswTzrcs$23.1 Bil
EPAM
EPAM Systems IncLskzrzpjqDbdxr$14.2 Bil

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