International Business Machines Corp (IBM, Financial) has seen a 2.1% daily gain and a 7.8% increase over the past three months. With an Earnings Per Share (EPS) of 2.15, the pressing question is whether the stock is fairly valued. This article aims to provide an in-depth analysis of IBM's valuation, inviting readers to delve into the financial intricacies of this tech giant.
Company Overview
International Business Machines (IBM, Financial) is a global tech behemoth operating in 175 countries and employing approximately 350,000 people. The company primarily sells software, IT services, consulting, and hardware, looking to be a part of every aspect of an enterprise's IT needs. IBM has a robust roster of 80,000 business partners to service 5,200 clients, including 95% of all Fortune 500 companies. Despite being a B2B company, IBM's outward impact is substantial; it manages 90% of all credit card transactions globally and is responsible for 50% of all wireless connections in the world.
Comparing the stock price of $149.6 to the GF Value of $137.95, it appears that IBM's stock is fairly valued. Let's delve deeper into the financials to understand the company's intrinsic value better.
The GF Value Explained
The GF Value is a proprietary measure of a stock's intrinsic value, computed considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line denotes the stock's ideal fair trading value.
According to our valuation method, International Business Machines Corp (IBM, Financial) appears to be fairly valued. The GF Value estimates the stock's fair value based on historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. If the share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. Conversely, if it is significantly below the GF Value Line, the stock may be undervalued and have higher future returns. At its current price of $ 149.6 per share, IBM's stock appears to be fairly valued.
Since International Business Machines is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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