International Business Machines
🇺🇸 IBM · NYSE/NASDAQ · US4592001014
Technology
USD 248.16 price at analysis
Scores
Key Metrics
Powered by EODHDP/E (TTM)
22.2
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: 248.16 ÷ 11.17 = 22.2
TTM period through: 2025-12-31
Forward P/E (estimated): 20.1
Based on analyst estimates
Reference: Provider P/E (Trailing): 22.3
Yield (Fwd)
2.71%
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): 2.76%
Net Debt/EBITDA (TTM)
3.1x
Latest quarter: 9.0x
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: 2025-12-31
Latest quarter (2025-12-31): 9.0x
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)
60.2%
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): 59.0%
Cash Flow Payout (TTM): 47.4%
FCF Coverage (TTM): 1.85x
ROE
35.2%
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
16.4x
EV/EBITDAA valuation ratio that compares total business value (including debt) to EBITDA. Lower can mean cheaper, but context matters.
Summary
IBM is a legacy technology giant successfully transitioning toward hybrid cloud and AI, but its sector carries structural obsolescence risks unsuitable for this conservative dividend strategy. While the recent GAAP net loss was merely a temporary non-cash accounting event, the combination of a sub-3% yield and an elevated P/E of 22 makes it unattractive for value-focused income investors. Not recommended for new positions, as better opportunities exist in more stable, essential service businesses.
Sector Context
IBM provides enterprise IT solutions, software, consulting, and infrastructure hardware, with a growing focus on hybrid cloud and AI services. However, the technology sector is characterized by rapid innovation and structural obsolescence risk, making it inherently unsuitable for conservative, 'forever' dividend strategies that prioritize highly predictable, essential services.
Temporary Opportunity Identified
Reported a GAAP net loss in Q3 2024 primarily due to a one-time, non-cash pension settlement charge of $2.7 billion related to transferring pension obligations.
📊 Strategy Analysis
- • Free cash flow generation remains robust, comfortably covering the dividend with a cash flow payout ratio of 47.42% and a dividend coverage ratio of 1.85x.
- • The recent Q3 2024 GAAP net loss was driven entirely by a one-time, non-cash pension settlement charge of $2.7 billion, which does not impact the company's core cash generation.
⚠ What to Watch
- • Operates in the Technology sector, which carries structural obsolescence risk that fundamentally conflicts with the strategy's requirement for stable, essential services.
- • The current dividend yield of 2.76% falls below the strategy's strict 3.0% minimum threshold for income generation.
- • Valuation multiples are significantly elevated with a TTM P/E of 22.23, pricing the stock well above the strategy's 8-15x target range.
📊 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: 2026-04-04
Disclaimer: This information is for educational purposes only. Not financial advice.