International Business Machines
🇺🇸 IBM · NYSE/NASDAQ · US4592001014
Technology
USD 219.30 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
19.4
P/E (Price-to-Earnings)Shows how much investors pay for each $1 of profit. We display the TTM P/E (Trailing Twelve Months) which uses actual earnings from the last 4 quarters. This is more reliable than Forward P/E which uses analyst estimates.
Calculation: 219.30 ÷ 11.31 = 19.4
TTM period through: 2026-03-31
Forward P/E (estimated): 18.6
Based on analyst estimates
Reference: Provider P/E (Trailing): 19.3
Yield (Fwd)
3.08%
Dividend YieldThe Forward yield (Fwd) shows the next announced annual dividend / current price — what you'd earn going forward. The Trailing yield (TTM) in the tooltip shows dividends actually paid in the last 12 months. Forward is shown as primary because it reflects the company's current commitment to shareholders.
Trailing Yield (TTM): 3.13%
Div. Growth (5Y CAGR)
0.4%
Growth Streak
2 yrs
Consecutive years of increase
Net Debt/EBITDA (TTM)
3.7x
Latest quarter: 32.2x
Net Debt / EBITDAA leverage ratio showing how many years of EBITDA (earnings before interest, taxes, depreciation, and amortization) it would take to repay net debt. EBITDA approximates operating cash generation. Lower ratios (e.g., <3x) are generally safer; higher (e.g., >5x) may indicate more financial risk.
TTM through: 2026-03-31
Latest quarter (2026-03-31): 32.2x
The quarterly value can spike when quarterly EBITDA is very low (e.g., one-time charges).
Quick guide: <2x manageable, >4x can be risky (sector-dependent).
Payout (Fwd)
59.8%
Payout RatioDividends as a percentage of earnings. The Forward payout (Fwd) uses the announced dividend divided by actual past earnings (TTM) — it tells you if the company can afford what it promised. Very high payouts can be risky, especially if profits fall.
Announced dividend / actual earnings (TTM)
Payout (TTM): 58.4%
Cash Flow Payout (TTM): 44.9%
FCF Coverage (TTM): 2.08x
ROE
35.8%
ROE (Return on Equity)A profitability measure: how much profit is generated from shareholders’ equity. Higher isn’t always better if it comes from high debt.
EV/EBITDA
15.5x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
While IBM generates robust free cash flow and maintains a highly secure dividend, its core operations in the rapidly evolving technology sector pose inherent obsolescence risks unsuitable for this conservative strategy. The recent GAAP loss was entirely driven by a temporary one-time pension charge, but with the stock trading at an elevated P/E of 19.4, the valuation offers no margin of safety to offset the sector mismatch. Not recommended for new positions, as better risk-adjusted income opportunities exist in more stable, essential service businesses.
Sector Context
IBM operates in the Technology sector, providing enterprise software, consulting, and infrastructure hardware with a heavy focus on hybrid cloud and AI solutions. For conservative dividend investors, the technology sector inherently carries structural obsolescence, rapid disruption risks, and high capital reinvestment requirements, which fundamentally conflict with the strategy's preference for stable, essential services with predictable, long-term business models.
Temporary Opportunity Identified
A one-time, non-cash pension settlement charge of $2.7 billion in Q3 2024 artificially depressed GAAP earnings, leading to a reported net loss despite strong underlying operating fundamentals and free cash flow.
📊 Strategy Analysis
- • Free cash flow covers the dividend comfortably with an excellent cash flow payout ratio of 44.9% (FCF coverage of 2.08x).
- • Recent GAAP net loss was entirely driven by a temporary, non-cash $2.7B pension settlement, leaving core operating income and cash generation intact.
- • Dividend yield has improved to 3.13%, crossing back above the strategy's minimum threshold.
⚠ What to Watch
- • Operates in the Technology sector, which carries inherent rapid obsolescence risks and structurally conflicts with the conservative 'forever' dividend strategy.
- • Valuation multiples remain elevated with a TTM P/E of 19.39, pricing the stock well above the strategy's target range of 8-15x.
- • Net Debt/EBITDA of 3.66x sits in the upper caution range for this strategy.
- • Infrastructure segment revenues face cyclical headwinds, declining 7% recently due to lower mainframe hardware sales.
📊 Historical Trends (10 Years)
Powered by EODHDThese charts show how key metrics have evolved over the past decade, helping you identify if the company is improving or deteriorating.
Debt Evolution (Net Debt / EBITDA)
Lower values are better. A declining trend indicates the company is reducing its debt (deleveraging).
Revenue & Earnings Growth
Consistent growth in revenueRevenue
The money a company brings in from selling its products or services. It’s the top line before costs. (blue) and earningsEarnings (Profit)
What’s left after expenses. Positive earnings mean the business made a profit; negative means a loss. (green) indicates a healthy business. Look for upward trends and recoveries after temporary dips.
Dividend Sustainability (FCF vs Dividends Paid)
Free cash flowFree Cash Flow
Cash left after the company pays for running the business and maintaining it. Often used to fund dividends, pay debt, or buy back shares. (FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., blue) should cover dividends paidDividends Paid
Cash the company paid out to shareholders. It’s not guaranteed and can change over time. (green). If dividends consistently exceed FCFFCF (Free Cash Flow)
Short for Free Cash Flow: cash left after operating needs and maintenance spending., the dividend may be at risk.
Analysis date: 2026-05-16
Disclaimer: This information is for educational purposes only. Not financial advice.