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:
Below please find a table outlining a discounted cash flow forecast for IBM, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that International Business Machines Corp ranked in the 50th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 16.5%. 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 5.43 years is -0.01%; that's better than only 15.52% 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 7%; for context, that number is higher than only 4.36% of tickers in our DCF set.
International Business Machines Corp's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than only 0% of US stocks with positive free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Technology that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as IBM, try STMP, CPSI, BABA, FLT, and CTSH.
Introduction IBM Corp. (IBM) has been undertaking a strategic business transformation for a few years now, aimed at teaching new tricks to this old dog. Since 2012, it has invested over $120 billion in its transformative efforts and over $45 billion in R&D for cloud, AI, blockchain and quantum computing....
Vincenzo Furcillo on Seeking Alpha | September 16, 2020
Ten years ago, shares of International Business Machines (IBM) traded for $123.13. As I write these words, the stock trades for $123.01, the very definition of dead money. The company's once formidable moat narrowed as the firm's legacy businesses declined. Consequently, this titanic tech firm trades for a pedestrian P/E...
Chuck Walston on Seeking Alpha | September 4, 2020