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International Business Machines (IBM) Stock Analysis
International Business Machines (IBM) Dividend
International Business Machines (IBM) has paid a dividend every year since 1916 and increased its dividend for 29 consecutive years; qualifying the company as a Dividend Aristocrat.
Current Dividend Annualized: $6.68
International Business Machines (IBM) Intrinsic Value – Margin of Safety Analysis
(updated March 2025)
Normalized Diluted Earnings Per Share (TTM): $6.42
Free Cash Flow Per Share (TTM): $12.55
Cash Flow From Operations (CFO) Per Share (TTM): $14.35
Estimated Intrinsic Value: $174
Target Buy Price Based on Required Margin of Safety = $124
(Required Margin of Safety Based On Risk Stability Grade:
A = 0%, B = 20%, C = 40%, D = 60%, F = 80%)
Target SELL Price Based on Estimated Intrinsic Value = $200
(Allow Overvaluation Adjusted by Risk Stability Grade:
A = 40%, B = 25%, C = 15%, D = 5%, F = 0%)
Risk / Stability Grade: C
A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.
B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.
C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.
D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.
F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.
Financial Risk Grade: C
A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.
B grade indicates a very low probability for a dividend cut.
C grade indicates a low probability for a dividend cut and/or average safety risk.
D grade indicates there are issues that should be considered concerning future dividend payments.
F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.
Business Quality Grade: B
A grade indicates earnings quality is high or far above average.
B grade indicates earnings quality is good and/or above average.
C grade indicates earnings quality is acceptable or average.
D grade indicates earnings quality is poor and requires thoughtful due diligence.
F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.
Earnings Report: 12/31/24
AAAMP Portfolios Position Disclosures:
Treasure Trove Dividend (TTD) – None
Global Dividend Value (GDV) – None
Dividend Growth & Income (DGI) – None
Global Value (GV) – None
Global Value Aggressive (GVA) – None
Global Conservative Income (GCI) – None
Global High Income (GHI) – None
Company Description
Sector: Technology
Industry: Information Technology Services
Company Overview:
IBM (International Business Machines) is a global technology company specializing in enterprise software, hybrid cloud computing, artificial intelligence, and IT consulting services. Once a dominant hardware provider, IBM has shifted its focus toward high-margin businesses, including AI-driven solutions, cybersecurity, and cloud computing, particularly through its Red Hat acquisition.
Company Strengths:
IBM benefits from a strong legacy in enterprise technology, a vast portfolio of patents, and deep relationships with large corporations and governments. Its pivot to hybrid cloud and AI, including investments in Watson and Red Hat, positions it well for future growth. The company’s steady cash flow supports consistent dividend payments, making it attractive to income-focused investors.
Company Challenges:
IBM faces intense competition in cloud computing from Amazon (AWS), Microsoft (Azure), and Google Cloud, which limits its market share expansion. The company has struggled with revenue growth, as its transformation efforts have been slow and legacy businesses continue to decline. Additionally, IBM must successfully execute its AI and cloud strategy while managing high restructuring costs and workforce adjustments.
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Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.