One-glance verdict
Within fair range
$215.66 our estimate vs market $236.35
Wall Street consensus: $245.35 (13.8% higher than our fair-value estimate)
10% above our estimate
Fundamentals snapshot
International Business Machines Corporation
IBM · NYQ · Technology · Information Technology Services
Current price
$236.35
52-week range
$199.19 - $332.46
Market cap
$222.67B
Balance sheet
Stretched
6.46x Adequate
Net debt $57.14B. 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 2.3% last year.
- Reward Returns 34.5% 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: 0.4%).
What this company does
International Business Machines Corporation
IBM helps large organizations and governments run their technology by providing a mix of software, expert advice (consulting), and computer systems. The company now makes most of its money from software and consulting, which is important because these areas generate more predictable, recurring revenue (income that comes in regularly, like a subscription) than one-time hardware sales.
How the company got here
Founded in 1911, IBM's journey began with tabulating machines that revolutionized data processing. Over the decades, it became a dominant force in the world of business technology, introducing iconic products like the System/360 mainframe computer, which set the standard for business computing, and the original IBM PC, which launched the personal computer revolution. Facing immense competition, IBM has repeatedly reinvented itself, shifting its focus from primarily selling hardware to providing a mix of software, consulting services, and high-end computing systems. A major recent move was the acquisition of Red Hat, which solidified its strategy around hybrid cloud (a mix of a company's own private computers and public cloud services) and artificial intelligence (AI).
What it actually does
Think of IBM as a technology partner for large organizations like banks, governments, and major corporations, not a company that sells phones or laptops to everyday consumers. It provides a combination of powerful computer systems, sophisticated software, and expert advice to help these organizations run their essential operations, like processing transactions, managing vast amounts of data, and modernizing their technology. A core part of its business is helping companies navigate the complexities of hybrid cloud, which allows businesses to run their applications across their own data centers and public clouds (like those from Amazon or Microsoft) in a secure and coordinated way.
Software
This is IBM's largest and most profitable business, making up a significant portion of its revenue. Instead of selling software you'd install on your home computer, IBM sells complex software that businesses use to manage their core operations, secure their data, and build and run applications. A key part of this segment is Red Hat, which provides open-source technologies that allow companies to build and run software across different types of computer systems and clouds. This segment also includes IBM's artificial intelligence (AI) platforms, like watsonx, which help businesses use their data to make better predictions and automate tasks.
Consulting
This is essentially IBM's team of experts who help businesses solve complex problems using technology. This segment, which generates about a third of the company's revenue, doesn't sell a physical product but rather sells its expertise in areas like business transformation, technology implementation, and managing applications. For example, a company might hire IBM Consulting to help them move their operations to the cloud, modernize their old software systems, or implement new AI-powered workflows to become more efficient.
Infrastructure
This is the part of IBM that sells powerful computer hardware and related support services. This includes their iconic mainframe computers, now called IBM Z systems, which are used by banks, airlines, and other large companies to process huge numbers of transactions securely and reliably. The infrastructure segment also provides data storage systems and other hardware that form the foundation of a company's IT environment, whether it's on their own premises or in a hybrid cloud setup.
Financing
This is a smaller, supporting part of IBM's business that helps customers pay for the company's products and services. Through IBM's financing arm, a client can get a loan or lease to acquire the hardware, software, and consulting services they need without having to pay the full cost upfront. This makes it easier for large organizations to invest in major technology upgrades and supports the sales of IBM's other segments.
What management is betting on now
IBM's current strategy is heavily focused on two key areas: hybrid cloud and artificial intelligence (AI). The company is betting that large businesses will continue to need a mix of their own private data centers and public cloud services, and IBM wants to be the go-to provider for managing this complex environment using its open-source software from Red Hat. At the same time, IBM is investing heavily in making AI practical for businesses, aiming to help clients embed AI into their core workflows to improve efficiency and make better decisions. The company's goal is to be a leader in providing the essential technology and expertise that large enterprises need to modernize their operations.
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 Q3
$2.60B
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
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
Revenue
$14.97B
Net income
$-330.00M
Diluted EPS
-0.36
Operating cash flow
$2.88B
Free cash flow
$2.60B
Fetching…
Sources
Is it cheap or expensive?
Fair value $215.66 vs current price $236.35
Wall Street consensus is the average analyst price target: $245.35 (13.8% higher than our fair-value estimate).
Our most-likely fair value is $215.66 a share — about 8.8% away from today's price of $236.35, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $57.1B. Interest coverage 6.5x.
Net debt
$57.14B
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 $65.27B Interest coverage 6.46x This is the baseline the peer rows are being compared against.
Total debt $8.39B Interest coverage 47.43x +635% vs IBM Carries about 7.3x more debt cushion than IBM.
Total debt $167.43B 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 2.3% last year.
-
Returns 34.5% 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: 0.4%).
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)
21.01x
Forward P/E
17.96x
P/B
6.46x
P/S
3.22x
EV/EBITDA
17.20x
PEG ratio
2.22x
Profitability
How much profit each dollar creates
Gross margin
58.1%
Operating margin
16.5%
Net margin
15.5%
ROE
34.5%
ROA
5.3%
Health
Liquidity and balance-sheet strength
Debt / equity
1.89x
Current ratio
0.79x
Quick ratio
0.61x
Total debt
$65.27B
Total cash
$8.13B
Growth
How the business has been compounding
Revenue TTM
$69.10B
Revenue 5Y CAGR
4.2%
EPS TTM
11.25
EPS 5Y CAGR
83.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$14.89B
Free CF TTM
$12.10B
FCF margin
17.5%
Dividend
Shareholder payout
Yield
2.8%
Payout ratio
59.8%
Last ex-div date
2026-08-10