IBM International Business Machines

IBM provides hybrid cloud computing, AI consulting, and technology infrastructure services, having repositioned as an enterprise-focused IT services and software company. Sector: Technology.

International Business Machines (IBM) is an individual stock. The analysis below presents key financial metrics for the company, covering profitability, capital efficiency, valuation, margins, and growth.

From a capital efficiency perspective, ROIC is 12.28%, WACC is 7.43%, and the economic spread is 4.85%. On balance, the company marginally exceed their cost of capital, suggesting modest but present value creation. Supporting metrics show ROE at 36.20% and ROA at 6.34%, a combination that helps frame whether profitability strength is broad enough to hold through different market conditions. Taken together, the return profile suggests a company that is value-creative but with less room for execution slippage.

Valuation currently screens at trailing P/E of 22.27, forward P/E of 20.04, PEG of 2.84. Trailing and forward P/E are close together, implying the market does not expect a significant change in the earnings trajectory over the near term. At this PEG level, the company is priced generously relative to its expected earnings trajectory — execution risk is meaningfully priced in. At 0.96, the aggregate current ratio reflects the company with limited near-term liquidity buffer. The valuation profile here is neither obviously cheap nor dramatically expensive — a setup where the return case is built more on earnings delivery than on re-rating potential.

On the margin front: gross margin sits at 58.19%, operating margin at 18.55%, and free cash flow margin at 17.44%. At this level, the company reflects reasonable cost discipline and adequate pricing leverage at the production layer. Operating margins sit in a healthy range — not exceptional, but indicating reasonable operational efficiency. Strong free cash flow margins point to businesses with meaningful financial flexibility and limited dependence on external capital. The combined margin read is functional rather than exceptional, which can increase sensitivity to cost pressure or slower demand.

The two main inputs to the near-term picture — TTM revenue growth of 12.15% reflecting consistent if unspectacular revenue expansion. Forecasted EPS growth of 11.2% over the next year is supportive of the current valuation, suggesting the market is not paying for earnings that won't arrive. Analyst price targets suggest street expectations imply a constructive but measured return profile on a 12-month view. Revenue momentum establishes the baseline; analyst price targets reveal how much the market is already paying for future execution on top of that baseline. Delivered returns will ultimately be shaped by the gap — or lack thereof — between operating execution and the expectations embedded in current prices. The estimated 12-month price change is based on analyst consensus price target estimates, sourced from publicly available data, and should not be interpreted as a reliable prediction of future performance.

The composite picture leans positive, with capital efficiency and growth momentum providing the core of the investment thesis.

This summary is based on publicly available quantitative data and is not intended as investment advice. Carefully consider your personal financial circumstances before making any decisions.