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 51th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 38.33% on a DCF basis. In terms of the factors that were most noteworthy in this DCF analysis for IBM, they are:
The company's balance sheet shows it gets 60% of its capital from equity, and 40% of its capital from debt. Notably, its equity weight is greater than merely 13.46% of US equities in the Technology sector yielding a positive free cash flow.
International Business Machines Corp's weighted average cost of capital (WACC) is 6%; for context, that number is higher than only 7.74% 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 only 7.74% of tickers in our DCF set.
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 COMM, NTCT, PAYC, ST, and CDK.