One-glance verdict
Undervalued
$331.17 our estimate vs market $253.56
Wall Street consensus: $257.22 (-22.3% lower than our fair-value estimate)
23% below our estimate, below the bear case
Fundamentals snapshot
International Business Machines Corporation
IBM · NYQ · Technology · Information Technology Services
Current price
$253.56
52-week range
$199.19 - $332.46
Market cap
$239.64B
Balance sheet
Stretched
6.46x Adequate
Net debt $56.08B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 3.5% last year.
- Reward Returns 34.8% on equity, ahead of 60% of its peers.
- Risk Net debt grew 10.9% over 3 years.
- Risk Insider ownership is only 0.1% (peer median: 0.2%).
What this company does
International Business Machines Corporation
IBM sells technology solutions and consulting services, mainly to big businesses, to help them use cloud computing and artificial intelligence. Their money comes from a mix of selling software, providing expert advice, and offering the hardware and financing needed to make these technologies work. This matters because it positions IBM as a partner for companies looking to update their technology for the future.
How the company got here
International Business Machines Corporation, or IBM, has a long history dating back to 1911, originally focused on tabulating machines. It officially became IBM in 1924 and grew to become a giant in the computing world, particularly known for its mainframes. A major turning point was its strategic shift in the early 2000s towards software and services, recognizing the changing landscape of technology. This pivot helped IBM adapt from primarily selling hardware to offering more comprehensive solutions for businesses.
What it actually does
IBM provides a wide range of technology solutions and services to businesses globally. Think of them as a company that helps other companies use technology to run their operations more smoothly and efficiently. This includes everything from the software that powers business processes to the consulting services that help companies figure out the best technology to use, and the infrastructure to support it all.
Software
This segment focuses on IBM's hybrid cloud and artificial intelligence (AI) platforms. Essentially, it provides the digital tools and smart technologies that allow other companies to manage their data and operations across different computing environments, whether on their own servers or in the cloud. This is a significant part of IBM's business, aiming to help clients modernize their operations with advanced capabilities.
Consulting
IBM's Consulting division offers expert advice and services to help businesses transform their operations. This involves helping companies implement new technologies, manage their existing systems, and modernize their applications using AI-powered solutions. It's like having a team of tech strategists and implementers guiding businesses through complex technological changes.
Infrastructure
This part of IBM deals with the physical and cloud-based hardware that businesses need to run their operations. It includes servers and storage solutions designed for hybrid cloud environments, meaning they can work both on a company's own premises and in external data centers. IBM also provides services to help manage and maintain this infrastructure throughout its lifespan.
Financing
The Financing segment supports IBM's clients by providing financial solutions to help them acquire IBM's hardware, software, and services. This can involve offering loans or leases, making it easier for businesses to invest in the technology they need without a large upfront cash outlay. It's a crucial support function that facilitates the adoption of IBM's broader offerings.
What management is betting on now
IBM's current strategy heavily emphasizes hybrid cloud and artificial intelligence. Management is focused on integrating these technologies to help clients accelerate their digital transformation and leverage AI for better business outcomes. This involves strengthening partnerships and developing new solutions that address the evolving needs of businesses in a rapidly changing technological landscape.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$4.03B
FY2025 Q1
$4.13B
FY2025 Q2
$1.49B
FY2025 Q3
$2.83B
FY2025 Q4
$3.66B
FY2026 Q1
$4.94B
FY2026 Q2
$2.37B
FY2026 Q3
$3.69B
Revenue
$17.10B
Net income
$2.19B
Diluted EPS
2.30
Operating cash flow
$4.03B
Free cash flow
$3.69B
Fetching…
Sources
Revenue
$17.16B
Net income
$2.17B
Diluted EPS
2.27
Operating cash flow
$2.60B
Free cash flow
$2.37B
Fetching…
Sources
Revenue
$15.92B
Net income
$1.22B
Diluted EPS
1.28
Operating cash flow
$5.17B
Free cash flow
$4.94B
Fetching…
Sources
Revenue
$19.69B
Net income
$5.60B
Diluted EPS
5.90
Operating cash flow
$4.04B
Free cash flow
$3.66B
Fetching…
Sources
Revenue
$16.33B
Net income
$1.74B
Diluted EPS
1.84
Operating cash flow
$3.08B
Free cash flow
$2.83B
Fetching…
Sources
Revenue
$16.98B
Net income
$2.19B
Diluted EPS
2.31
Operating cash flow
$1.70B
Free cash flow
$1.49B
Fetching…
Sources
Revenue
$14.54B
Net income
$1.05B
Diluted EPS
1.12
Operating cash flow
$4.37B
Free cash flow
$4.13B
Fetching…
Sources
Revenue
$17.55B
Net income
$2.91B
Diluted EPS
3.11
Operating cash flow
$4.33B
Free cash flow
$4.03B
Fetching…
Sources
Is it cheap or expensive?
Fair value $331.17 vs current price $253.56
Wall Street consensus is the average analyst price target: $257.22 (-22.3% lower than our fair-value estimate).
Our most-likely fair value is $331.17 a share — about 30.6% above today's price of $253.56, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $56.1B. Interest coverage 6.5x.
Net debt
$56.08B
Interest coverage
6.46x
International Business Machines Corporation's profit covers its interest bill about 6.5 times over. which is stronger than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
IBM
BASELINE
International Business Machines Corporation
Total debt $67.14B Interest coverage 6.46x This is the baseline the peer rows are being compared against.
Total debt $13.40B Interest coverage 37.59x +482% vs IBM Carries about 5.8x more debt cushion than IBM.
Total debt $169.14B Interest coverage 4.88x -24% vs IBM Carries about 1.3x less debt cushion than IBM.
Total debt $128.81B Interest coverage 50.88x +688% vs IBM Carries about 7.9x more debt cushion than IBM.
Total debt $20.32B Interest coverage 14.05x +118% vs IBM Carries about 2.2x more debt cushion than IBM.
Total debt $35.28B Interest coverage 5.41x -16% vs IBM Carries about 1.2x less debt cushion than IBM.
What you should know
The case for and against IBM
3 Rewards
2 Risks
Rewards
-
Revenue grew 3.5% last year.
-
Returns 34.8% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Net debt grew 10.9% over 3 years.
-
Insider ownership is only 0.1% (peer median: 0.2%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
21.63x
Forward P/E
19.16x
P/B
6.74x
P/S
3.43x
EV/EBITDA
17.82x
PEG ratio
2.40x
Profitability
How much profit each dollar creates
Gross margin
58.0%
Operating margin
17.0%
Net margin
16.0%
ROE
34.8%
ROA
5.3%
Health
Liquidity and balance-sheet strength
Debt / equity
1.85x
Current ratio
0.85x
Quick ratio
0.68x
Total debt
$67.14B
Total cash
$11.06B
Growth
How the business has been compounding
Revenue TTM
$69.87B
Revenue 5Y CAGR
4.2%
EPS TTM
11.72
EPS 5Y CAGR
83.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$15.83B
Free CF TTM
$12.10B
FCF margin
17.3%
Dividend
Shareholder payout
Yield
2.7%
Payout ratio
57.5%
Last ex-div date
2026-11-10