Long-established in the Software industry, International Business Machines Corp (IBM, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.81%, juxtaposed with a three-month change of 29.13%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of International Business Machines Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 1/10
- Momentum rank: 9/10
Based on the above method, GuruFocus assigned International Business Machines Corp a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding International Business Machines Corp's Business
International Business Machines Corp, with a market cap of $199.46 billion and sales of $62.36 billion, operates at the heart of the IT industry. The company boasts an operating margin of 15.46% and employs approximately 350,000 people worldwide. IBM's extensive network includes 80,000 business partners and serves 5,200 clients, including 95% of the Fortune 500 companies. Notably, IBM handles 90% of all credit card transactions globally and is responsible for 50% of all wireless connections worldwide, highlighting its significant impact on both the B2B sector and broader technological landscape.
Financial Strength Breakdown
International Business Machines Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.23 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-equity ratio is 2.49, which is worse than 95.02% of 2,211 companies in the Software industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Growth Prospects
A lack of significant growth is another area where International Business Machines Corp seems to falter, as evidenced by the company's low Growth rank. Additionally, International Business Machines Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering the company's financial strength, profitability, and growth metrics, the GF Score highlights International Business Machines Corp's unparalleled position for potential underperformance. For investors seeking more robust opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
