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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
International Business Machines Corporation (XNYS:IBM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
IBM
Name:
INTERNATIONAL BUSINESS MACHINES CORPORATION (XNYS:IBM)
Sector:
2.80B
Industry:
Information Technology Services
CEO:
Mrs. Virginia Rometty
Total Employees:
307,600
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -79.04% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF INTERNATIONAL BUSINESS MACHINES CORPORATION(IBM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INFORMATION TECHNOLOGY SERVICES INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
127.79
One Month Price Target:
$128.39
Six Month Price Target :
$131.39
Likely Price in One Year's Time:
Ticker:
$134.98
Likely Trading Range Today Under (Normal Volatility)
$127.38
Price Upper limit ($) :
$128.23
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$122.67
This week:
$116.34
This month :
$104.89
Other Primary facts
Market Cap:
114.45B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
903.18M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
11.3%
-12.85%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$151.56
$140.72
$104.02
$114.86
Medium risk (<10%) entry points
Buy Call
Sell Call
$137.19
Buy Put:
Sell Put:
$134.88
$118.36
$120.70
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
IBM
Sharpe Ratio:
0.19%
Comparison:
IBM, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -89.30% lower than the industry
& is -91.49% lower than the market/S&P 500 average
Average Returns/Yield of
IBM
Daily returns:
0.01%
Weekly returns:
0.06%
Monthly returns:
0.25%
Yearly returns:
14.44%
Comparison of returns:
Average annual returns/yield (last 3 years) is -78.98% below industry average
Classification:
IBM, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.84
Statistical test of Returns:
IBM has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.96%
Weekly Volatility:
4.38%
Monthly Volatility:
8.75%
Yearly Volatility:
30.32%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.02%
Volatility in last five trading days has been -47.98% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.01%
Weekly VaR:
-8.96%
Monthly VaR:
-17.92%
How Much Can the price of
IBM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-62.06%
This translates to price declining to:
$107.73
This translates to price declining to:
$48.48
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
IBM is a 26.45% riskier investment compared to the market/S&P 500 & is 8.33% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -35.50% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
IBM
Beta in relation to market/S&P 500--0.84
Expected beta in 1 year's time:
0.746
Expected beta in 3 year's time:
1.055
Unlevered (debt free) Beta:
0.24
Beta in relation to Nasdaq (XNAS):
0.562
Beta in relation to all global stocks::
0.702
Beta Comparison & Analysis
Beta of competitors/peers::
1.244
Beta is -32.65% lower than peers
Average Industry Beta:
1.209
Beta is -30.70% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
-0.059
Alpha is -294.72% below industry average alpha yield
Alpha is -373% below the market average
Analysis of Cost of Capital of
IBM
Equity cost of capital:
0.089
Equity cost of capital is -22.24% below industry mean WACC
Unlevered (without debt) cost of capital:
2.55%
Before-tax cost of debt:
2.06%
After-tax cost of debt:
1.63%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.63%
WACC is -31.30% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$59.59
Revenue growth rate per share of (3Y):
6.04
Annual revenue growth rate is -244.48% below industry average
EPS:
$6.09
Expected Annual growth rate of EPS (3Y):
-21.66%
Expected future EPS growth rate is -738.64% lower than the Information Technology Services industry
Free cash flow (FCF) per share:
$9.55
Balance sheet equity growth per share: 5.43%
Equity growth rate per share is -82.67% lower than the industry
Debt per share
$54.15
EBITDA per share
$14.22
Valuation Analysis Today of
IBM
P/E Ratio:
19.9
P/E Ratio of Competitors/Peers:
132.32
P/E ratio is -84.96% lower than main peers & is -58.08% lower than the industry
Stock price/value with industry average P/E ratio: $289.08
IBM is -55.79% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $99.35
Present value of the expected future dividends only: $75.59
P/S (Price to Sales ratio):
2.14
Price to sales ratio is -41.28% below the industry mean
P/B (Price to book value ratio):
6.04
Price to free cash flow: 13.39
Price to free cash flow ratio is -48.74% lower than the industry
Net income growth rate (3Y):
-33.04%
Net income growth rate is -100.04% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 26.72%
Dividend yeild: 5.14%
Previous Dividend: $1.65
Previous adjusted dividend: $1.65
Previous Dividend: $6.57
Expected next dividend best case: $1.66
Expected next dividend worst case: $1.64
Average dividend payment (long-term): $1.63
Average dividend increase/decrease (growth rate) % per period: 0.18%
Expected next dividend payment date: 09/08/2022
Expected next dividend record date: 08/08/2022
Expected next dividend declaration date: 25/07/2022
Previous dividend payment date: 06/10/2022
Previous dividend record date: 05/10/2022
Previous dividend declaration date: 26/04/2022
Dividend History:
2022-05-09--$1.65
2021-11-09--$1.64
2021-05-07--$1.64
2022-02-10--$1.64
2021-08-09--$1.64
2021-02-09--$1.63
Dividend growth rate is -102.50% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
256.71%
Net debt to equity ratio:
249.94%
Debt to assets ratio:
36.69%
Net debt to assets ratio:
35.73%
Debt-to-asset ratio is -42.17% below industry average
Ability to repay debt:
Interest coverage ratio:
10.83
Interest coverage ratio is -74.08% less than industry average
Looking forward:
Debt growth rate:
-12.33%
Annual debt growth is -307% lower than industry average debt growth rate
Debt repayment rate in last quarter: 2.26%
Analysis of Key Statistics
Correlation of price movement with the market:
0.67
Statistical significance of correlation:
IBM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.596
Stock price is 12.40% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.596
Correlation of price movement with Nasdaq (^IXIC):
0.028
Covariance of price movement with the market:
0.032
Kurtosis
8.029
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.533
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
IBM
Gross Profit Margin Ratio:
333%
Operating Profit Margin Ratio:
12.03%
Operating profit margin is -273.20% lower than the industry
Net Profit Margin Ratio:
333%
Effective Tax Rate:
2.96%
Effective tax rate is -88.77% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
28.98%
Return on equity (ROE) is -48.48% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
4.14%
Return on assets (ROA) is 4751.91% higher than the industry
Financial Leverage:
1.6x
Current Ratio:
0.92
Current ratio is -60.27% below industry average
Cash Conversion Cycle (days):
-1.2
Cash conversion cycle is -103.32% below industry average
The remaining useful life of property plant & equipment is: 1.0 years
Stock based compensation to net income ratio:
4.24%
In-depth Efficiency Analysis
Revenue generated per employee:
175.0K
Each employee generates -59% less revenue than industry average revenue per employee
EBITDA generated per employee:
41.7K
Each employee generates -7% less EBITDA than industry average revenue per employee
Profit generated per employee:
17.9K
Each employee generates 111% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
9.1K
Each employee generates -237% less free cash flow than industry average revenue per employee
Assets/Capital per employee
331.4K
Each employee generates -237% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 2.45%
Growth rate in R&D investment/expenditure is -92.19% lower than the industry
Competitors/Peer firms of
IBM
SERVICENOW, INC. (XNYS:NOW)
INFOSYS LIMITED (XNYS:INFY)
SHOPIFY INC. (XNYS:SHOP)
Sony Group Corporation (XNYS:SONY)
UBER TECHNOLOGIES, INC. (XNYS:UBER)
SAP SE (XNYS:SAP)
Abb Ltd (XNYS:ABB)
FIDELITY NATIONAL INFORMATION SERVICES, INC. (XNYS:FIS)
BLOCK, INC. (XNYS:SQ)
Current Analyst Ratings
Strong buy�17%
Buy�13%
Hold�63%
Sell�13%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
53.82B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
23.20B
30.62B
6.54B
15.53B
16.93B
1.40B
676.00M
24.15B
55.00M
1.19B
6.00B
12.84B
6.47B
5.52B
4.56B
135.00M
5.52B
Statement of Cash Flow
Date:
Period:
1.26B
Differed Income Tax :
-
Stock Based Compensation :
234.00M
Change in Working Capital :
1.08B
Accounts Receivables:
1.63B
Other Working Capital:
- 606000.00K
Other Non-Cash Items:
- 51000.00K
Net Cash Provided by Operating Activities:
3.25B
Investments in PP&E:
- 281000.00K
Net Acquisitions:
- 637000.00K
Purchases of Investments:
- 1025000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
9.93B
550.00M
10.48B
13.73B
1.78B
5.35B
31.33B
8.67B
56.11B
12.31B
1.77B
7.57B
15.52B
101.94B
203.89B
133.28B
3.45B
8.64B
1.80B
13.53B
8.43B
34.06B
48.90B
27.78B
80.11B
-
114.16B
57.60B
153.40B
- 22532000.0K
-
March 31, 2022 at 6:00:00 AM
47.35B
19.05B
133.21B
2.32B
57.55B
47.6B
682.00M
- 97000.00K
- 1358000.00K
- 1129000.00K
-
- 80000.00K
- 1475000.00K
4.06B
1.38B
- 5000.00K
3.26B
10.22B
6.96B
3.25B
- 450000.00K
2.80B
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
IBM
2023
2024
2025
2026
2027
$135.65
$280.87
$296.68
$313.38
$331.02