One-glance verdict
Within fair range
$223.90 our estimate vs market $225.62
Wall Street consensus: $240.59 (7.5% higher than our fair-value estimate)
1% above our estimate
Fundamentals snapshot
International Business Machines Corporation
IBM · NYQ · Technology · Information Technology Services
Current price
$225.62
52-week range
$199.19 - $332.46
Market cap
$212.56B
Balance sheet
Stretched
6.46x Adequate
Net debt $57.14B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 2.3% last year.
- Reward Returns 34.5% on equity, ahead of 60% of its peers.
- Risk Net debt grew 10.9% over 3 years.
- Risk Insider ownership is only 0.1% (peer median: 0.4%).
What this company does
International Business Machines Corporation
International Business Machines (IBM) is a technology company that sells a mix of software, powerful computer hardware, and expert consulting services to large businesses and governments. The company makes most of its money today from software and consulting, helping clients with things like artificial intelligence and cloud computing. This is important because it is a shift toward creating more predictable recurring revenue (steady income from ongoing subscriptions and contracts) rather than relying on less frequent, one-time hardware sales.
How the company got here
Founded in 1911, IBM's journey began with tabulating machines that revolutionized data processing. Over the decades, it became a dominant force in the world of mainframe computers, which are large, powerful computers used by big organizations. A major turning point was the introduction of the System/360 in 1964, a family of computers that set the standard for the industry. While it played a key role in the personal computer revolution, IBM has since shifted its focus from hardware to software and consulting services, especially after acquiring Red Hat, a major software company, in 2019.
What it actually does
While you won't find IBM products on the shelves of your local electronics store, their technology is likely working behind the scenes in your daily life. For example, when you use an ATM, check your bank account, or even when a store scans a product's barcode, there's a good chance IBM's technology is involved in processing those transactions. Today, IBM primarily helps large businesses and organizations operate more efficiently by providing a mix of software, expert advice (consulting), and powerful computer systems. They specialize in areas like cloud computing (delivering computing services over the internet) and artificial intelligence to help their clients modernize and grow.
Software
This is IBM's largest and most profitable business area, making up nearly half of the company's revenue. This segment provides the software that helps businesses run their operations, from managing data to automating tasks and ensuring cybersecurity. A key part of this is their 'hybrid cloud' platform, which allows companies to manage their information and applications across their own private computers and public services like Amazon Web Services or Microsoft Azure. Companies pay IBM for subscriptions to use this software and for ongoing support.
Consulting
Think of this division as a team of experts that other companies hire to solve their biggest technology challenges. IBM's consultants advise businesses on how to update their technology, move to the cloud, and use artificial intelligence to improve their operations. This segment, which accounts for about a third of IBM's revenue, helps clients with everything from strategy to implementing new systems and even running parts of their business for them.
Infrastructure
This is the part of IBM that still builds and sells powerful computer hardware. Their most well-known products are their mainframe servers, which are highly reliable and secure computers used by banks, airlines, and governments for critical tasks. This segment also includes data storage systems and other specialized hardware. While not the biggest part of IBM's business, it provides the essential foundation for many of their software and cloud services.
Financing
This is the smallest segment of IBM's business. It helps customers purchase IBM's products and services by offering them loans and leasing options. This makes it easier for companies to invest in new technology without having to pay the full cost upfront. The financing division also handles the remarketing and recycling of used IBM equipment.
What management is betting on now
IBM's leadership is heavily focused on two key areas: hybrid cloud and artificial intelligence (AI). They believe that most businesses will not move all of their computing to a single public cloud, but will instead use a mix of their own data centers and multiple cloud providers. IBM aims to provide the software and expertise to manage this complex environment. At the same time, they are embedding AI into their products and services to help businesses automate tasks, gain insights from their data, and create new products and services.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$2.60B
FY2024 Q4
$4.03B
FY2025 Q1
$4.13B
FY2025 Q2
$1.49B
FY2025 Q3
$2.83B
FY2025 Q4
$3.66B
FY2026 Q1
$4.94B
FY2026 Q2
$2.37B
Revenue
$17.16B
Net income
$2.17B
Diluted EPS
2.27
Operating cash flow
$2.60B
Free cash flow
$2.37B
Fetching…
Sources
Revenue
$15.92B
Net income
$1.22B
Diluted EPS
1.28
Operating cash flow
$5.17B
Free cash flow
$4.94B
Fetching…
Sources
Revenue
$19.69B
Net income
$5.60B
Diluted EPS
5.90
Operating cash flow
$4.04B
Free cash flow
$3.66B
Fetching…
Sources
Revenue
$16.33B
Net income
$1.74B
Diluted EPS
1.84
Operating cash flow
$3.08B
Free cash flow
$2.83B
Fetching…
Sources
Revenue
$16.98B
Net income
$2.19B
Diluted EPS
2.31
Operating cash flow
$1.70B
Free cash flow
$1.49B
Fetching…
Sources
Revenue
$14.54B
Net income
$1.05B
Diluted EPS
1.12
Operating cash flow
$4.37B
Free cash flow
$4.13B
Fetching…
Sources
Revenue
$17.55B
Net income
$2.91B
Diluted EPS
3.11
Operating cash flow
$4.33B
Free cash flow
$4.03B
Fetching…
Sources
Revenue
$14.97B
Net income
$-330.00M
Diluted EPS
-0.36
Operating cash flow
$2.88B
Free cash flow
$2.60B
Fetching…
Sources
Is it cheap or expensive?
Fair value $223.90 vs current price $225.62
Wall Street consensus is the average analyst price target: $240.59 (7.5% higher than our fair-value estimate).
Our most-likely fair value is $223.90 a share — about 0.8% away from today's price of $225.62, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $57.1B. Interest coverage 6.5x.
Net debt
$57.14B
Interest coverage
6.46x
International Business Machines Corporation's profit covers its interest bill about 6.5 times over. which is stronger than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
IBM
BASELINE
International Business Machines Corporation
Total debt $65.27B Interest coverage 6.46x This is the baseline the peer rows are being compared against.
Total debt $13.40B Interest coverage 47.43x +635% vs IBM Carries about 7.3x more debt cushion than IBM.
Total debt $169.14B Interest coverage 4.88x -24% vs IBM Carries about 1.3x less debt cushion than IBM.
Total debt $128.81B Interest coverage 50.88x +688% vs IBM Carries about 7.9x more debt cushion than IBM.
Total debt $20.32B Interest coverage 14.05x +118% vs IBM Carries about 2.2x more debt cushion than IBM.
Total debt $35.28B Interest coverage 5.41x -16% vs IBM Carries about 1.2x less debt cushion than IBM.
What you should know
The case for and against IBM
3 Rewards
2 Risks
Rewards
-
Revenue grew 2.3% last year.
-
Returns 34.5% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Net debt grew 10.9% over 3 years.
-
Insider ownership is only 0.1% (peer median: 0.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
20.04x
Forward P/E
17.16x
P/B
6.17x
P/S
3.08x
EV/EBITDA
16.38x
PEG ratio
2.08x
Profitability
How much profit each dollar creates
Gross margin
58.1%
Operating margin
16.5%
Net margin
15.5%
ROE
34.5%
ROA
5.3%
Health
Liquidity and balance-sheet strength
Debt / equity
1.89x
Current ratio
0.79x
Quick ratio
0.61x
Total debt
$65.27B
Total cash
$8.13B
Growth
How the business has been compounding
Revenue TTM
$69.10B
Revenue 5Y CAGR
4.2%
EPS TTM
11.26
EPS 5Y CAGR
83.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$14.89B
Free CF TTM
$12.10B
FCF margin
17.5%
Dividend
Shareholder payout
Yield
3.0%
Payout ratio
59.8%
Last ex-div date
2026-08-10