INTERNATIONAL BUSINESS MACHINES CORP (IBM) Stock Analysis
INTERNATIONAL BUSINESS MACHINES CORP (IBM) Stock Analysis
Analysis from 10-Q filed 2025-10-23. Data as of Q4 2025.
Overall Grade: F (Concerning)
INTERNATIONAL BUSINESS MACHINES CORP faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 12.3% | Solid returns |
| FCF Margin | 17.9% | Strong cash generation |
| Debt/Equity | 1.9x | Elevated debt |
Investment Thesis: Healthy free cash flow margin of 17.9% provides financial flexibility for growth and shareholder returns.
Explore INTERNATIONAL BUSINESS MACHINES CORP: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: INTERNATIONAL BUSINESS MACHINES CORP earns 12.3% ROIC, Top 50% in Technology
INTERNATIONAL BUSINESS MACHINES CORP's trailing-twelve-month ROIC of 12.3% ranks Top 50% in Technology companies (sector median: 5.2%), driven by NOPAT margin of 16.5% combined with asset turnover of 0.5x. Source: 10-Q filed 2025-10-23. Gross margin of 58.2% with operating margin at 16.1% reflects strong pricing power.
| Metric | IBM | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.3% | Good | Above sector median of 5.2% |
| Return on Equity (ROE) | 37.7% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 58.2% | Excellent | Strong pricing power |
| Operating Margin | 16.1% | Good | Efficient operations |
Cash Flow: INTERNATIONAL BUSINESS MACHINES CORP generates $12.1B FCF at 17.9% margin, positive NaN/8 quarters
INTERNATIONAL BUSINESS MACHINES CORP generated $12.1B in free cash flow (TTM), a 17.9% FCF margin, a margin that ranks Top 50% in Technology. Operating cash flow exceeds net income by 1.2x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-23.
| Metric | IBM | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 17.9% | Good | Excellent cash conversion |
| Free Cash Flow (TTM) | $12.1B | Good | Positive cash generation |
| OCF/Net Income | 1.2x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: INTERNATIONAL BUSINESS MACHINES CORP at 1.9x leverage
INTERNATIONAL BUSINESS MACHINES CORP's debt-to-equity ratio of 1.9x reflects high leverage. Total debt of $61.3B offset by $13.6B in cash. Source: 10-Q filed 2025-10-23.
| Metric | IBM | Rating | Context |
|---|---|---|---|
| Debt to Equity | 1.9x | Warning | Elevated leverage |
| Net Cash Position | $-47.6B | Warning | Net debt position |
Valuation: INTERNATIONAL BUSINESS MACHINES CORP trades at 26.1x earnings
INTERNATIONAL BUSINESS MACHINES CORP trades at a P/E of 26.1x. Free cash flow yield of 4.4% reflects market expectations for growth.
| Metric | IBM | Rating | Context |
|---|---|---|---|
| P/E Ratio | 26.1x | Adequate | Premium valuation |
| EV/Sales | 4.8x | Good | Growth premium priced in |
| FCF Yield | 4.4% | Good | Lower cash yield |
| Dividend Yield | 2.3% | Adequate | Growth focus over income |
Capital Allocation: INTERNATIONAL BUSINESS MACHINES CORP returns 2.3% shareholder yield
INTERNATIONAL BUSINESS MACHINES CORP's total shareholder yield is 2.3% (dividends 2.3% + buybacks). Source: 10-Q filed 2025-10-23.
| Metric | IBM | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 2.3% | Adequate | Dividend + buyback yield combined |
| Total Capital Returned (TTM) | $6.3B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.3% | Top 50% | 2.4x above |
| Free Cash Flow Margin | 17.9% | Top 50% | 2.0x above |
| Gross Margin | 58.2% | Top 50% | 1.1x above |
| Operating Margin | 16.1% | Top 25% | 3.3x above |
| Return on Equity (ROE) | 37.7% | Top 25% | 7.7x above |
| P/E Ratio | 26.1x | N/A | - |
Financial Scorecard
| Metric | IBM | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.3% | Good | Top 50% of sector (median: 5.2%) |
| Free Cash Flow Margin | 17.9% | Good | Top 50% of sector (median: 9.1%) |
| Gross Margin | 58.2% | Excellent | Top 50% of sector (median: 51.8%) |
| Debt to Equity Ratio | 187.6% | Warning | High financial leverage |
| P/E Ratio (Price-to-Earnings) | 26.1x | Adequate | Growth premium |
| Free Cash Flow Yield | 4.4% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is INTERNATIONAL BUSINESS MACHINES CORP's Return on Invested Capital (ROIC)?
INTERNATIONAL BUSINESS MACHINES CORP (IBM) has a trailing twelve-month Return on Invested Capital (ROIC) of 12.3%. This compares above the sector median of 5.2%. An ROIC between 12-20% indicates solid capital allocation and sustainable competitive position.
Q: What is INTERNATIONAL BUSINESS MACHINES CORP's Free Cash Flow Margin?
INTERNATIONAL BUSINESS MACHINES CORP (IBM) has a free cash flow margin of 17.9%, generating $12.1 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is INTERNATIONAL BUSINESS MACHINES CORP stock overvalued or undervalued?
INTERNATIONAL BUSINESS MACHINES CORP (IBM) trades at a P/E ratio of 26.1x, which is above the sector median of N/A. The EV/Sales multiple is 4.8x. Free cash flow yield is 4.4%, which is in line with market averages.
Q: Does INTERNATIONAL BUSINESS MACHINES CORP pay a dividend?
INTERNATIONAL BUSINESS MACHINES CORP (IBM) currently pays a dividend yield of 2.3%. Including share buybacks, the total shareholder yield is 2.3%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does INTERNATIONAL BUSINESS MACHINES CORP have?
INTERNATIONAL BUSINESS MACHINES CORP (IBM) has a debt-to-equity ratio of 1.9x with total debt of $61.3 billion. Net debt position is $47.6 billion.
Q: What is INTERNATIONAL BUSINESS MACHINES CORP's revenue and earnings growth?
INTERNATIONAL BUSINESS MACHINES CORP (IBM) grew revenue by 7.6% year-over-year. Earnings per share increased by 73.7% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: How does INTERNATIONAL BUSINESS MACHINES CORP compare to competitors in Technology?
Compared to other companies in Technology, INTERNATIONAL BUSINESS MACHINES CORP (IBM) shows: ROIC of 12.3% is above the sector median of 5.2% (Top 31%). FCF margin of 17.9% exceeds the sector median of 9.1% (Top 30% of sector). Gross margin at 58.2% is 6.3 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with INTERNATIONAL BUSINESS MACHINES CORP?
Investors in INTERNATIONAL BUSINESS MACHINES CORP (IBM) should monitor these potential warning signs: 1) Debt-to-equity of 1.9x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-23. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.