One-glance verdict
Within fair range
$12.31 our estimate vs market $11.70
Wall Street consensus: $14.10 (14.6% higher than our fair-value estimate)
5% below our estimate
Fundamentals snapshot
Kyndryl Holdings, Inc.
KD · NYQ · Technology · Information Technology Services
Current price
$11.70
52-week range
$10.10 - $44.20
Market cap
$2.57B
Balance sheet
Stretched
7.13x Adequate
Net debt $2.33B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
0 Risks
3 rewards · 0 risks
- Reward Revenue grew 0.2% last year.
- Reward Returns 15.1% on equity, ahead of 50% of its peers.
- Reward Free cash flow was positive in 3/10 years.
What this company does
Kyndryl Holdings, Inc.
Kyndryl acts as the technology manager for large global companies, running the complex computer systems that businesses like banks and airlines depend on every day. The company makes money from long-term service contracts to manage and modernize this technology for its clients. This is important because the company's success depends on its ability to sign new customers and improve its profit margins (the portion of each sales dollar it keeps after paying for its expenses).
How the company got here
Kyndryl was originally the part of IBM that managed the day-to-day, behind-the-scenes technology for large companies. In 2021, IBM decided to spin this division off into a new, independent company so IBM could focus on other areas like artificial intelligence software. This separation allowed Kyndryl to form its own partnerships with major technology players, including IBM's competitors like Microsoft and Google. It launched as the world's largest IT infrastructure services provider, already having relationships with a majority of the world's biggest companies. The name Kyndryl comes from the words 'kinship' and 'tendril,' meant to signal its focus on building relationships and growing with its customers.
What it actually does
Think of Kyndryl as a highly skilled technical crew for the world's largest corporations. The company doesn't sell products you'd see in a store; instead, it designs, builds, and manages the massive, complex, and essential technology systems that businesses depend on to operate. This includes running their data centers (the secure buildings full of computers that store and process information), modernizing their old systems, and keeping their computer networks secure and efficient. Essentially, Kyndryl is the expert partner that large organizations hire to manage their critical IT 'plumbing' so they can focus on their own business.
Cloud Services
Many companies are moving their technology from private data centers to the public 'cloud' (massive, efficient data centers run by companies like Amazon, Microsoft, and Google). Kyndryl helps them make this move and then manages their systems in the cloud. Businesses pay Kyndryl for its expertise in planning the migration, executing it smoothly, and then managing their cloud operations day-to-day. This part of the business is central to Kyndryl's future, as it partners with all the major cloud providers to serve its clients.
Core Enterprise and zCloud
This segment is the company's historical foundation, focused on managing the core technology that large businesses, especially banks and airlines, have relied on for decades. This includes powerful mainframe computers (highly reliable computers for processing huge amounts of transactions) and other foundational server and data storage systems. Customers pay Kyndryl long-term fees to keep these absolutely critical systems running, secure, and up-to-date. While not the fastest-growing area, it provides a stable base of revenue (money the company earns from sales) for the company.
Applications, Data & AI
Beyond just the hardware, Kyndryl helps companies manage their software applications, make sense of the vast amounts of data they collect, and use artificial intelligence (AI) to become more efficient. For example, they might help a company use AI to predict when its equipment needs maintenance before it breaks down. Companies pay for these services to make their operations smarter and more data-driven. This is a key growth area as businesses everywhere are looking to benefit from AI and data analytics.
Digital Workplace, Security & Network Services
This part of the business focuses on keeping a company's employees connected and protected. It includes Digital Workplace services, which ensure thousands of employees have the secure and reliable technology they need to do their jobs, whether in the office or at home. It also covers Security and Resiliency services, which protect against cyberattacks and create backup plans to recover from outages, and Network services, which manage the complex web of connections that link a company's computers and systems.
Kyndryl Consult
This is Kyndryl's advisory business, which acts like a team of expert technology architects for its clients. Instead of just managing existing systems, Kyndryl Consult helps companies plan major technology upgrades and transformations from the very beginning. Businesses pay for this strategic advice to make sure their large, expensive IT projects are successful. This is a smaller but fast-growing and important part of the company, as it helps Kyndryl win larger projects across its other service areas.
What management is betting on now
Management's strategy focuses on three key areas they call the 'Three A's': Alliances, Advanced Delivery, and Accounts. A top priority is building strong Alliances with major cloud providers like Amazon, Microsoft, and Google to jointly serve customers, something it couldn't do as part of IBM. For Advanced Delivery, the company is heavily investing in automation and AI through its Kyndryl Bridge platform to make its own work more efficient and improve its margins (the portion of sales revenue that turns into profit). Finally, it is focusing on key Accounts by renegotiating or exiting less profitable contracts inherited from IBM to improve the company's overall financial health.
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.
FY2025 Q1
$-170.00M
FY2025 Q2
$15.00M
FY2025 Q3
$151.00M
FY2025 Q4
$341.00M
FY2026 Q1
$-267.00M
FY2026 Q2
$17.00M
FY2026 Q3
$208.00M
FY2026 Q4
$382.00M
Revenue
$3.77B
Net income
—
Diluted EPS
0.08
Operating cash flow
$498.00M
Free cash flow
$382.00M
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Sources
Revenue
$3.86B
Net income
—
Diluted EPS
0.25
Operating cash flow
$428.00M
Free cash flow
$208.00M
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Sources
Revenue
$3.72B
Net income
—
Diluted EPS
0.29
Operating cash flow
$146.00M
Free cash flow
$17.00M
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Sources
Revenue
$3.74B
Net income
—
Diluted EPS
0.23
Operating cash flow
$-124.00M
Free cash flow
$-267.00M
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Sources
Revenue
$3.80B
Net income
—
Diluted EPS
0.30
Operating cash flow
$581.00M
Free cash flow
$341.00M
Fetching…
Sources
Revenue
$3.74B
Net income
—
Diluted EPS
0.89
Operating cash flow
$260.00M
Free cash flow
$151.00M
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Sources
Revenue
$3.77B
Net income
—
Diluted EPS
-0.19
Operating cash flow
$149.00M
Free cash flow
$15.00M
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Sources
Revenue
$3.74B
Net income
—
Diluted EPS
0.05
Operating cash flow
$-48.00M
Free cash flow
$-170.00M
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Sources
Is it cheap or expensive?
Fair value $12.31 vs current price $11.70
Wall Street consensus is the average analyst price target: $14.10 (14.6% higher than our fair-value estimate).
Our most-likely fair value is $12.31 a share — about 5.2% away from today's price of $11.70, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $2.3B. Interest coverage 7.1x.
Net debt
$2.33B
Interest coverage
7.13x
Kyndryl Holdings, Inc.'s profit covers its interest bill about 7.1 times over. which is stronger than every peer shown here.
Stretched
Worse cushion
Baseline
Better cushion
KD
BASELINE
Kyndryl Holdings, Inc.
Total debt $4.96B Interest coverage 7.13x This is the baseline the peer rows are being compared against.
Total debt $4.25B Interest coverage 1.39x -81% vs KD Carries about 5.1x less debt cushion than KD.
Total debt $1.73B Interest coverage 4.43x -38% vs KD Carries about 1.6x less debt cushion than KD.
Total debt $2.68B Interest coverage 4.07x -43% vs KD Carries about 1.8x less debt cushion than KD.
Total debt $765.30M Interest coverage 2.50x -65% vs KD Carries about 2.9x less debt cushion than KD.
What you should know
The case for and against KD
3 Rewards
0 Risks
Rewards
-
Revenue grew 0.2% last year.
-
Returns 15.1% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
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)
13.76x
Forward P/E
4.51x
P/B
2.22x
P/S
0.17x
EV/EBITDA
3.68x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
21.8%
Operating margin
4.1%
Net margin
1.3%
ROE
15.1%
ROA
3.3%
Health
Liquidity and balance-sheet strength
Debt / equity
3.84x
Current ratio
0.88x
Quick ratio
0.63x
Total debt
$4.96B
Total cash
$2.62B
Growth
How the business has been compounding
Revenue TTM
$15.09B
Revenue 5Y CAGR
35.9%
EPS TTM
0.85
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$948.00M
Free CF TTM
$340.00M
FCF margin
2.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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