International Business Machines Corporation (IBM) Company Bio
International Business Machines provides information technology (IT) products and services worldwide. The companys Global Technology Services segment provides IT infrastructure and business process services, such as outsourcing, processing, integrated technology, cloud, and technology support. Its Global Business Services segment offers consulting and systems integration services for strategy and transformation, application innovation services, enterprise applications, and smarter analytics, and application management, maintenance, and support services. The company was founded in 1910 and is based in Armonk, New York.
IBM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for International Business Machines Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that International Business Machines Corp ranked in the 52th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 20%. The most interesting components of our discounted cash flow analysis for International Business Machines Corp ended up being:
The compound growth rate in the free cash flow of International Business Machines Corp over the past 5.75 years is -0.02%; that's better than only 18.9% of cash flow producing equities in the Technology sector, where it is classified.
International Business Machines Corp's weighted average cost of capital (WACC) is 6%; for context, that number is higher than merely 5.91% of tickers in our DCF set.
IBM's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than merely 5.91% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of International Business Machines Corp? See MXL, SCKT, UEIC, CSOD, and OSIS.
One of the places they've found cash returns is in dividend stocks, particularly those that offer a relatively high payout. Fortunately, some high-yield dividend stocks remain well-positioned to sustain their dividends. AbbVie (NYSE: ABBV) spent most of its history as a subsidiary of Abbott Laboratories before becoming an independent company in 2013.
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