August 29, 2024
Top 10 Stock IBM Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: IBM – Top 10 Stock in Dow Jones Industrial Average
IBM is listed as a top 10 stock on August 29, 2024 in the market index Dow Jones because of its high performance in at least one of the Obermatt investment strategies. While only half of the consolidated Obermatt Ranks exhibit above-average performance, the professional market sentiment is positive and it may be a solid investment proposition, especially if a growth recovery is to be expected soon. Based on the Obermatt 360° View of 80 (top 80% performer), Obermatt assesses an overall strong buy recommendation for IBM on August 29, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | IT Consulting & oth. Services |
| Index | Dow Jones, Artificial Intelligence, Dividends USA, Diversity USA, Renewables Users, Recycling, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View IBM Strong Buy
| 360 METRICS | August 29, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 85 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 41 |
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| SENTIMENT | ||||||||
| SENTIMENT | 79 |
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| 360° VIEW | ||||||||
| 360° VIEW | 80 |
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ANALYSIS: With an Obermatt 360° View of 80 (better than 80% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock IBM are very positive. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for IBM. The consolidated Value Rank has an attractive rank of 85, which means that the share price of IBM is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 85% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 79, which means that professional investors are more optimistic about the stock than for 79% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 43, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 41, meaning the company has a riskier financing structure than 59 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 80, IBM is better positioned than 80% of all alternative stock investment opportunities based on the Obermatt Method. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 85) and positive market sentiment in the professional investor community (Sentiment Rank of 79), but growth expectations are below-average (Growth Rank of 43) and the financing structure is on the risky side(Safety Rank of 41). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (positive sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of IBM is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for IBM very positive
ANALYSIS: With an Obermatt Sentiment Rank of 79 (better than 79% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock IBM is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for IBM. Analyst Opinions are at a rank of 27 (worse than 73% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 60, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in IBM. Even better, the Professional Investors rank is 89, meaning that professional investors hold more stock in this company than in 89% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 92, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 92% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 79 (more positive than 79% compared with investment alternatives), IBM has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: IBM Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 85 (better than 85% compared with alternatives) for 2024, IBM shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for IBM. Price-to-Sales (P/S) is 57, which means that the stock price compared with what market professionals expect for future sales is lower than for 57% of comparable companies, indicating a good value concerning IBM's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 59% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 99 (dividends are expected to be higher than 99% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 65% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for IBM to 35. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 85, is a buy recommendation based on IBM's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: IBM Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 43 (better than 43% compared with alternatives), IBM shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below average for IBM. Sales Growth has a below market rank of 26, which means that, currently, professionals expect the company to grow less than 74% of its competitors. The same is valid for Capital Growth, with a rank of 36, and Profit Growth, with a rank of 26. Currently, professionals expect the company to grow its profits less than 74% of its competitors). Only shareholders are optimistic. Stock Returns are above average at a rank of 87, which means that the stock returns have recently been above 87% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 43, is a hold recommendation for growth and momentum investors. That picture may be the result for a company that has reached the bottom. All went south for IBM, and it still looks bad, but some investors already see light at the end of the tunnel, rewarding the stock with recent above-market stock returns. It could also mean that investors are correcting an overreaction to negative news. If that were the case, the positive stock returns are not yet a sign of recovery. Investors should look closely at the Value and Sentiment indicators before they make a stock purchasing decision, because growth is unlikely to be the driving argument behind this investment. ...read more
Safety Strategy: IBM Debt Financing Safety below-average
| SAFETY METRICS | August 29, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 23 |
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| REFINANCING | ||||||||
| REFINANCING | 31 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 73 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 41 |
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ANALYSIS: With an Obermatt Safety Rank of 41 (better than 41% compared with alternatives), the company IBM has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of IBM is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for IBM. Liquidity is at 73, meaning the company generates more profit to service its debt than 73% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 31, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 69% of its competitors. Leverage is also high at a rank of 23, which means that the company has an above-average debt-to-equity ratio. It has more debt than 77% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 41 (worse than 59% compared with alternatives), IBM has a financing structure that is riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: IBM Above-Average Financial Performance
| COMBINED PERFORMANCE | August 29, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 85 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 73 |
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| COMBINED | ||||||||
| COMBINED | 69 |
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ANALYSIS: With an Obermatt Combined Rank of 69 (better than 69% compared with investment alternatives), IBM (IT Consulting & oth. Services, USA) shares have above-average financial characteristics compared with similar stocks. Shares of IBM are a good value (attractively priced) with a consolidated Value Rank of 85 (better than 85% of alternatives) but show below-average growth (Growth Rank of 43), and are riskily financed (Safety Rank of 41), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 69, is a buy recommendation based on IBM's financial characteristics. As the company IBM's key financial metrics exhibit good value (Obermatt Value Rank of 85) but low growth (Obermatt Growth Rank of 43) and risky financing practices (Obermatt Safety Rank of 41), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 85% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
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