IBM Stock Offers A Whole Lot Of Nothing Going Into Earnings

Investor's Compass
778 Followers
(9min)

Summary

  • IBM's recent stock surge is likely driven by AI hype, but its fundamental growth and valuation don't justify the high price.
  • The company's dividend yield and growth rate are unimpressive, and buybacks are insufficient to offset stock-based compensation.
  • IBM's free cash flow has gone nowhere over the years, but the stock's valuation has become elevated.
  • The good thing for IBM investors is that the stock generally rises after earnings, but this is not something I'd want to speculate on after its recent rally.

Entrance of modern office tower at City of Zürich.

Michael Derrer Fuchs

International Business Machines (NYSE:IBM), also known as IBM, has roughly doubled in price since its October 2023 low. Does this valuation surge make sense? Not really. In my view, IBM is a solid company, but the stock offers investors a whole

This article was written by

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I objectively search for undervalued stocks of any size across a wide variety of industries using quantitative methods that I've thoroughly backtested for success. I believe the numbers are more important than the story (most of the time), as they tend to paint a more realistic picture of the company’s prospects. I have been investing since 2013. Apart from what I’ve learned from experience, my knowledge comes from reading a vast number of stock market books over the years. Some of my favorites include 100 Baggers, Financial Shenanigans, and The Quants.Earlier part of StockBros Research and now writing under this account.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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