International Business Machines Corp (IBM) stock analysis
International Business Machines Corp (IBM) clears 5 of this site's 8 mechanical value filters, 7 of 8 Buffett-style checks and 3 of 5 Lynch-style checks. At $252.11 it trades 2.1% below this site's neutral DCF value (a margin of safety of +2.1%). Its earnings quality rates Strong and it returns +1.9% to shareholders net of dilution. Figures are as of October 23, 2026, from SEC filings and market data refreshed weekly; this is educational analysis, not investment advice.
Data as of October 23, 2026. Refreshed weekly from SEC filings and market data.
What does IBM do?
IBM sells hybrid-cloud software, AI tools, mainframe computers and IT consulting to large organizations. Since spinning off its infrastructure outsourcing arm in 2021 it is mostly software and consulting, with Red Hat as its cloud foundation.
Brands and businesses it owns
- Red Hat
- watsonx
- IBM Consulting
- IBM Z mainframes
- HashiCorp
What stands out about IBM?
- The share price implies 7.5% yearly growth. At $252.11, IBM's free cash flow of $15.08 per share would have to grow 7.5% a year, fading to 2.5% by year 10, for this site's DCF (10% discount rate) to match the price. This site's baseline starts at 8%, so the price asks for less growth than the baseline. Change the assumptions.
- Misses 1 of the 8 value filters. It fails PEG Ratio < 1.5 (2.41); the other 5 pass and 2 were not evaluated. See every filter.
- The margin of safety is falling. It went from +7% on Oct 7 to +2% on Oct 23 across 5 weekly readings. See the trend.
- Strongest against peers: dividend yield. At 2.70% (peer median 1.04%) it ranks 3rd of 17 among technology stocks this site tracks. See the ranking.
- Weakest against peers: revenue growth. At 6.8% (peer median 19.1%) it ranks 40th of 44 among technology stocks this site tracks. See the ranking.
How has IBM's share price moved?
The interactive price chart needs JavaScript.
Is IBM undervalued? The value diligence check
Every value-investing signal this site computes for this stock, gathered in one place: the same real numbers from the tools below, not a new score.
- Margin of safety (DCF) +2.1%
- P/E vs. its own history 21.0x · near the cheap end Real range: 20.1x–78.4x over 5 years (net income per diluted share from each fiscal year's 10-K, paired with the real closing price at that fiscal year-end).
- Wall St. analyst rating Buy · 3.73/5 30 analysts this month: 8 strong buy, 8 buy, 12 hold, 2 sell, 0 strong sell (Finnhub). Up from 3.71 last month.
- Earnings quality (is the profit real?) Strong · 1 watch Beneish M-score −2.39 · accruals −1.8% of assets · 168% of profit arrived as cash · stock comp 2.5% of revenue · share count +1.4% a year. From the latest 10-K (year to Dec 2025) - see the Earnings Quality Screener for how each check is scored.
- Shareholder yield (cash back to owners) +1.9% net Latest fiscal year (2025): dividends 2.7% + buybacks 0.0% − stock comp 0.7%, as a share of today's market cap. Over 14 years its split-adjusted share count fell 22%. See Shareholder Yield Leaders.
- Capital needed to grow (See's test) Profit did not grow in 10 years Operating profit $12B → $10B, capital needed $59B → $78B, 2016–2025 (3-year averages); return on capital now 13% before tax. Buffett's See's Candies needed $0.42 per $1 of new profit, FlightSafety $3.20, a typical grower about $5. See Capital-Light Compounders.
- PEG (growth at a reasonable price) 2.41 · Well above fair P/E 21.0× ÷ 8.7% a year of growth behind it. 270th lowest of 447 stocks with a usable PEG. Lynch's fair value is a PEG of 1; a very high PEG usually means almost no growth, a very low one a profit spike. See PEG Ratio Ranking.
- Compounder lenses (4) 2 of 4 · misses capital-light, price Capital-light growth: not cleared (profit grew 0.8×, under 2×); Profit is real: cleared; Cash to owners: cleared; Fair price (PEG): not cleared (PEG 2.41, over 1.5). See Compounders at a Fair Price, which also lets you move the PEG bar.
- Value trap check Clear
- Munger's Inversion Check 0 flags
- Standing vs. sector peers 4 of 7 measures above the median Compared with the 43 other technology stocks this site tracks: 2 in the top third, 2 in the bottom third.
- Dividend payout sustainability 0/6 · clean
How does IBM compare with its peers?
4 of 7 measures sit above the median of the 43 other technology stocks tracked here, 2 in the top third and 2 in the bottom third.
- P/E ratiolower is cheaper · peer median 26.0× 21.0× –16th of 39
- Free-cash-flow yieldhigher is cheaper · peer median 3.8% 6.0% ✓11th of 44
- Return on equityhigher is better · peer median 24% 33% –19th of 44
- Net marginhigher is better · peer median 16.9% 16.0% –23rd of 44
- Revenue growthhigher is better, year on year · peer median 19.1% 6.8% ✕40th of 44
- Debt / equitylower is safer · peer median 0.60 1.80 ✕37th of 44
- Dividend yieldamong dividend payers · peer median 1.04% 2.70% ✓3rd of 17
Peers are the stocks this site tracks in the same sector group, not every listed competitor. The bar runs from the weakest peer (left) to the strongest (right); the tick is the middle. Measures that don't apply to a sector (cash-flow yield for banks, debt for financials) are left out.
What would Buffett & Lynch say?
Buffett's checklist is built around durable, profitable businesses bought at sensible prices, and IBM clears it. In its favor: IBM is currently earning a strong return on shareholders' equity, and has kept that profitability up over five years, not just this year, converts sales into profit at healthy margins, has grown earnings per share at a solid clip over five years, earns many times its interest expense, so debt service isn't a worry, is trading below what a conservative discounted-cash-flow estimate says it's worth - his own "price is what you pay, value is what you get" test, not a fixed multiple ceiling, and trades at a reasonable multiple of owner earnings, his own term for the real cash a business could pay out. Where it comes up short: IBM carries more debt relative to equity than he typically tolerates.
- ROE (TTM) > 11% ✓
- ROE (5yr avg) > 11% ✓
- Debt/Equity < 0.5 ✕
- Pretax margin > 15% ✓
- EPS growth (5yr) > 7% ✓
- Interest coverage > 5x ✓
- Trading below intrinsic value (DCF) ✓
- Price vs. owner earnings < 25x ✓
Lynch looked for growth stories that weren't overpriced for that growth, and IBM falls short of his bar. In its favor: IBM is growing earnings 20-50% a year, his classic fast-grower zone, isn't asking too much even by a fast grower's usual richer multiple, and is generating real cash to back up a fast grower's higher price tag. Where it comes up short: IBM doesn't clear the tighter PEG bar a fast grower needs to justify its pace, and is leaning on more debt than he liked a growth story to carry.
- PEG < 1 (stricter for fast growers) ✕
- EPS growth 20%-50% ✓
- Debt/Equity < 0.5 ✕
- P/E < 40 ✓
- Price/FCF < 40 ✓
Quantitative approximations of each investor's documented approach, not endorsed by either investor or their estates - commentary, not this site's actual ranking criteria. Buffett never published a numeric checklist: only 2 of his 8 checks here trace to his own documented concepts ("owner earnings," from his 1986 shareholder letter, and "price is what you pay, value is what you get," his case against fixed P/E/P/B ceilings) - the other 6 (ROE, debt, margins, growth, interest coverage) use commonly-cited thresholds that are not numbers he himself published. The 8 hard filters below (plus the Munger check and Graham margin of safety) are this site's real, mechanical screen and are computed completely independently of the checklists above.
Berkshire Hathaway's own filing
Which of the 8 value filters does IBM pass?
- Market Cap > $25B $234.4B
- Trailing P/E < 25 20.99
- PEG Ratio < 1.5 2.41
- Price/Book < 8 6.59
- Price/Sales < 7 3.35
- EPS Growth YoY > -5% +24.9%
- vs 50-day MA (±12%) Not evaluated †
- vs 200-day MA (±12%) Not evaluated †
What is IBM's margin of safety?
+7% on 2026-10-07 → +2% on 2026-10-23 (5 weekly readings).
Where is IBM in its 52-week range?
What is the short interest in IBM?
24,164,783 shares short as of 2026-09-30 (FINRA settlement date). Reported twice a month, so this only changes roughly every two weeks, not daily.
What could go wrong with IBM? Munger's inversion check
"Invert, always invert." Instead of reasons to buy, these are reasons to hesitate, not a verdict, and not everything worth knowing about a business.
- Margin of safety, even in the bull case +42%
- Short interest under 5% of float 2.6%
- Passes most of the 6 fundamental filters 5/6 passed
- Price run-up backed by value, not just momentum +22% off 52wk low
- Debt/equity stable since 2016 2.24 → 1.88
Doesn't cover circle of competence, management quality, or accounting concerns: those need judgment, not data.
How much have IBM shareholders gained per year?
Earnings growth per share plus dividend.
An earnings-based proxy, not a stock-price total return - it doesn't capture multiple expansion/contraction or reinvested dividends. EPS from IBM's own 10-K filings; dividend yield is the current trailing yield on today's price, from the same weekly fetch as the rest of this site.
What do IBM's 10-year financials show?
From IBM's own 10-K filings (SEC EDGAR): up to the last 10 fiscal years. Press any year's bars for the exact figures.
Frequently asked questions about IBM
What kind of company is IBM?
IBM sells hybrid-cloud software, AI tools, mainframe computers and IT consulting to large organizations. Since spinning off its infrastructure outsourcing arm in 2021 it is mostly software and consulting, with Red Hat as its cloud foundation. Brands and businesses it owns include Red Hat, watsonx, IBM Consulting, IBM Z mainframes and HashiCorp. This site groups it with Technology stocks.
Is IBM trading above or below its DCF value?
At $252.11, IBM trades 2.1% below this site's neutral DCF value of $257.52 per share, a margin of safety of +2.1%. That DCF projects free cash flow for 10 years, with growth starting at 8% and fading to 2.5%, discounted at 10%; it is one set of assumptions, not a forecast. Test your own in the Intrinsic Value Calculator.
How many of this site's 8 value filters does IBM pass?
IBM passes 5 of 8. It passes Market Cap > $25B ($234.4B), Trailing P/E < 25 (20.99), Price/Book < 8 (6.59), Price/Sales < 7 (3.35) and EPS Growth YoY > -5% (+24.9%). It misses PEG Ratio < 1.5 (2.41). vs 50-day MA (±12%) and vs 200-day MA (±12%) were not evaluated, because the moving-average checks only run on stocks that clear the fundamentals first. The 8-filter list shows every stock that passes all of them.
What growth is IBM's share price pricing in?
At $252.11, IBM's free cash flow of $15.08 per share would have to grow 7.5% a year, fading to 2.5% by year 10, for this site's DCF (10% discount rate) to match the price. This site's baseline starts at 8%, so the price asks for less growth than the baseline. Change the assumptions.
Are IBM's reported earnings reliable?
This site's earnings-quality check rates IBM Strong · 1 watch. Beneish M-score −2.39 · accruals −1.8% of assets · 168% of profit arrived as cash · stock comp 2.5% of revenue · share count +1.4% a year. From the latest 10-K (year to Dec 2025). Concerns: share dilution (on watch). The five checks are the Beneish M-score (manipulation risk), accruals, cash conversion, stock-based compensation and share dilution; the Earnings Quality Screener shows how each is graded.
How fast has IBM grown its revenue and profit?
From fiscal 2016 to fiscal 2025, IBM's revenue fell from $79.9 billion to $67.5 billion, 1.9% a year. Net income went from $11.9 billion to $10.6 billion, and its net profit margin from 14.9% to 15.7%. Earnings per share went from $12.38 to $11.17 on today's share count, -1.1% a year. In fiscal 2025 it produced $12.1 billion of free cash flow (cash from operations minus capital spending), 17.9% of its revenue. All figures are from IBM's own 10-K filings (SEC EDGAR) and are shown year by year in the 10-Year Financials section of the card above.
Where do these numbers come from?
- Financial statements: IBM's 10-K annual report for the year ended Dec 31, 2025, filed Feb 24, 2026 (filing index). Every earlier year in the 10-year financials comes from the company's older 10-K filings, all listed on SEC EDGAR.
- Prices and market data: quotes, P/E and analyst ratings from Finnhub; daily price history and the 52-week range from Twelve Data, both refreshed weekly. Short interest comes from FINRA, reported twice a month.
- How to check a figure: click any number in the card above to see its exact source, and read the Editorial Standards for every rule behind the checks.
About this International Business Machines Corp analysis
This page shows every value-investing check the site runs on International Business Machines Corp (IBM) in one place: the 8 mechanical filters, the Buffett and Lynch checklists, a margin of safety from a disclosed DCF, earnings quality, shareholder yield and how it ranks against its sector peers. The numbers come from SEC filings and public market data, refreshed weekly, and the same rules apply to every stock on the stock list. See Editorial Standards for the sources and the rules, or run your own filters in the stock screener.