IBM Common Shares (IBM) by the Numbers
Investors Observer gives IBM Common Stock (IBM) a strong valuation score of 72 from its analysis. The proprietary rating system takes into account the underlying health of a company by analyzing its stock price, earnings and rate of growth. IBM currently holds better value than 72% of the shares based on these metrics. Long-term buy and hold investors should find the most relevant valuation ranking system when making investment decisions.
IBM has a year-over-year price-to-earnings (PE) ratio of 22.4. The historical average of around 15 shows low value for IBM stocks as investors pay higher stock prices relative to company earnings. IBM’s high PE ratio shows that the company has recently traded above its fair market value. Its 12-month earnings per share (EPS) of 5.93 does not justify the current share price. However, leakage PE ratios do not take into account the company’s projected growth rate, so many newer companies have high PE ratios due to high growth potential attracting investors despite insufficient profits. IBM has a 12-month PE forward growth (PEG) ratio of 1.54. Markets are overvaluing IBM relative to its projected growth, as its PEG ratio is currently above fair market value of 1. The PEG of 5.92999982 is derived from its forward price / earnings ratio divided by its growth rate. PEG ratios are one of the most widely used valuation metrics due to the incorporation of more fundamental business metrics and the focus on the future of the business rather than its past.
IBM’s valuation metrics are weak at its current price due to an overvalued PEG ratio despite strong growth. IBM’s PEs and PEGs are below the market average, resulting in a lower than average review score. Click here for the full report on IBM Common Stock (IBM) stocks.