As of May 28, 2025, International Business Machines Corp has a Discounted Cash Flow (DCF) derived fair value of $275.80 per share. With the current market price at $263.23, this represents a potential upside of 4.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $238.46 |
| DCF Fair Value (10-year) | $275.80 |
| Potential Upside (5-year) | -9.4% |
| Potential Upside (10-year) | 4.8% |
| Discount Rate (WACC) | 6.5% - 8.0% |
Revenue is projected to grow from $62753 million in 12-2024 to $85015 million by 12-2034, representing a compound annual growth rate of approximately 3.1%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 62753 | 1% |
| 12-2025 | 63096 | 1% |
| 12-2026 | 67004 | 6% |
| 12-2027 | 69226 | 3% |
| 12-2028 | 70610 | 2% |
| 12-2029 | 72022 | 2% |
| 12-2030 | 74096 | 3% |
| 12-2031 | 75578 | 2% |
| 12-2032 | 77606 | 3% |
| 12-2033 | 80997 | 4% |
| 12-2034 | 85015 | 5% |
Net profit margin is expected to improve from 10% in 12-2024 to 18% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 6470 | 10% |
| 12-2025 | 6144 | 10% |
| 12-2026 | 7702 | 11% |
| 12-2027 | 9113 | 13% |
| 12-2028 | 10416 | 15% |
| 12-2029 | 11710 | 16% |
| 12-2030 | 12259 | 17% |
| 12-2031 | 12719 | 17% |
| 12-2032 | 13278 | 17% |
| 12-2033 | 14083 | 17% |
| 12-2034 | 15015 | 18% |
with a 5-year average of $2181 million. Projected CapEx is expected to maintain at approximately 4% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 2006 |
| 12-2026 | 1953 |
| 12-2027 | 2075 |
| 12-2028 | 2240 |
| 12-2029 | 2552 |
| 12-2030 | 2634 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 42 |
| Days Inventory | 18 |
| Days Payables | 54 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 8193 | 789 | 1766 | 488 | 5149 |
| 2026 | 12802 | 1320 | 2501 | 356 | 8626 |
| 2027 | 14639 | 1561 | 2583 | 176 | 10318 |
| 2028 | 16367 | 1784 | 2635 | 351 | 11597 |
| 2029 | 18233 | 2006 | 2688 | 210 | 13329 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 238.46 | -9.4% |
| 10-Year DCF (Growth) | 275.80 | 4.8% |
| 5-Year DCF (EBITDA) | 125.85 | -52.2% |
| 10-Year DCF (EBITDA) | 165.14 | -37.3% |
Is International Business Machines Corp (IBM) a buy or a sell? International Business Machines Corp is definitely a buy. Based on our DCF analysis, International Business Machines Corp (IBM) appears to be slightly undervalued with upside potential of 4.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a hold with potential to accumulate at the current market price of $263.23.