Skip to Content

International Business Machines Corp IBM

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

IBM Beats on Q4 Earnings but Continues to Suffer from Cloud Workload Migration; Shares Fairly Valued

Julie Bhusal Sharma Equity Analyst

Analyst Note

| Julie Bhusal Sharma |

IBM reported fourth-quarter results that beat CapIQ earnings consensus expectations--but top line performance weighed on overall results, as the company’s revenue came behind CapIQ consensus estimates. While we forecast a return to top line growth for IBM in the upcoming fiscal year, a meager annual growth of 1% year over year is the extent we expect. IBM’s largest and worst-performing segment, global technology services is still expected to be spun off by the end of fiscal 2021. We continue to believe this spin-off will only improve IBM’s remaining business in optics--as the separation should expose IBM’s other segments’ better growth and profitability profiles. We are maintaining our fair value estimate of $125 per share for the narrow-moat name, which leaves shares fairly valued, in our view.

Read Full Analysis

Company Profile

Business Description

IBM looks to be a part of every aspect of an enterprise’s IT needs. The company primarily sells infrastructure services (37% of revenue), software (29% of revenue), IT services (23% of revenue) and hardware (8% of revenues). 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.

Contact
One New Orchard Road
Armonk, NY, 10504
T +1 914 499-1900
Sector Technology
Industry Information Technology Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 381,100

Related