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International Business Machines Corp IBM

Morningstar Rating
$172.46 −1.46 (0.84%)
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Company Report

The Age of IT Interoperability Continues to Take a Toll on IBM’s Economic Moat

IBM still brings the “big” to its moniker Big Blue. IBM is one of the world’s largest IT services companies, the dominant provider of mainframes and a prominent player in the public cloud, data management systems, and other software products, like middleware and integration software. While IBM has tried to refresh its diverse offerings, we think IBM’s moat is weakening as the cloud transition chips away at IBM’s competitive advantage associated with customer switching costs.

Price vs Fair Value

IBM is trading at a 232% premium.
Price
$172.46
Fair Value
$221.00
Uncertainty
Medium
1-Star Price
$448.19
5-Star Price
$77.60
Economic Moat
Wjbgt
Capital Allocation
Gzjbl

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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News

Trading Information

Previous Close Price
$173.92
Day Range
$171.40174.96
52-Week Range
$129.18199.18
Bid/Ask
$172.02 / $172.50
Market Cap
$158.42 Bil
Volume/Avg
10.2 Mil / 4.0 Mil

Key Statistics

Price/Earnings (Normalized)
17.37
Price/Sales
2.57
Dividend Yield (Trailing)
3.86%
Dividend Yield (Forward)
3.87%
Total Yield
4.17%

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

Competitors

Valuation

Metric
IBM
ORCL
HPQ
Price/Earnings (Normalized)
17.3725.4110.73
Price/Book Value
6.8144.79
Price/Sales
2.577.540.69
Price/Cash Flow
12.9520.858.57
Price/Earnings
IBM
ORCL
HPQ

Financial Strength

Metric
IBM
ORCL
HPQ
Quick Ratio
0.950.590.38
Current Ratio
1.130.720.75
Interest Coverage
5.784.216.93
Quick Ratio
IBM
ORCL
HPQ

Profitability

Metric
IBM
ORCL
HPQ
Return on Assets (Normalized)
6.88%11.49%9.22%
Return on Equity (Normalized)
40.76%363.05%
Return on Invested Capital (Normalized)
12.11%19.73%41.27%
Return on Assets
IBM
ORCL
HPQ
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