IBM Relative Valuation
IBM's fair value is calculated using relative valuation, based on historical P/E and P/S ranges and their premiums/discounts relative to a competitor average, adjusted by weights. If the market price exceeds this fair value range, IBM is overvalued; if below, it's undervalued.
Historical Valuation
International Business Machines Corp (IBM) is now in the Fair zone, suggesting that its current forward PE ratio of 24.11 is considered Fairly compared with the five-year average of 16.80. The fair price of International Business Machines Corp (IBM) is between 261.32 to 344.44 according to relative valuation methord.
Relative Value
Fair Zone
261.32-344.44
Current Price：301.89
Fair
24.11
PE
1Y
3Y
5Y
16.88
EV/EBITDA
International Business Machines Corp. (IBM) has a current EV/EBITDA of 16.88. The 5-year average EV/EBITDA is 12.16. The thresholds are as follows: Strongly Undervalued below 6.95, Undervalued between 6.95 and 9.56, Fairly Valued between 14.77 and 9.56, Overvalued between 14.77 and 17.37, and Strongly Overvalued above 17.37. The current Forward EV/EBITDA of 16.88 falls within the Overvalued range.
22.82
EV/EBIT
International Business Machines Corp. (IBM) has a current EV/EBIT of 22.82. The 5-year average EV/EBIT is 17.09. The thresholds are as follows: Strongly Undervalued below 10.65, Undervalued between 10.65 and 13.87, Fairly Valued between 20.31 and 13.87, Overvalued between 20.31 and 23.53, and Strongly Overvalued above 23.53. The current Forward EV/EBIT of 22.82 falls within the Overvalued range.
3.92
PS
International Business Machines Corp. (IBM) has a current PS of 3.92. The 5-year average PS is 2.45. The thresholds are as follows: Strongly Undervalued below 1.01, Undervalued between 1.01 and 1.73, Fairly Valued between 3.17 and 1.73, Overvalued between 3.17 and 3.89, and Strongly Overvalued above 3.89. The current Forward PS of 3.92 falls within the Strongly Overvalued range.
16.25
P/OCF
International Business Machines Corp. (IBM) has a current P/OCF of 16.25. The 5-year average P/OCF is 11.01. The thresholds are as follows: Strongly Undervalued below 5.12, Undervalued between 5.12 and 8.07, Fairly Valued between 13.96 and 8.07, Overvalued between 13.96 and 16.91, and Strongly Overvalued above 16.91. The current Forward P/OCF of 16.25 falls within the Overvalued range.
17.40
P/FCF
International Business Machines Corp. (IBM) has a current P/FCF of 17.40. The 5-year average P/FCF is 13.25. The thresholds are as follows: Strongly Undervalued below 7.73, Undervalued between 7.73 and 10.49, Fairly Valued between 16.01 and 10.49, Overvalued between 16.01 and 18.77, and Strongly Overvalued above 18.77. The current Forward P/FCF of 17.40 falls within the Overvalued range.
International Business Machines Corp (IBM) has a current Price-to-Book (P/B) ratio of 9.76. Compared to its 3-year average P/B ratio of 7.43 , the current P/B ratio is approximately 31.48% higher. Relative to its 5-year average P/B ratio of 6.81, the current P/B ratio is about 43.41% higher. International Business Machines Corp (IBM) has a Forward Free Cash Flow (FCF) yield of approximately 4.58%. Compared to its 3-year average FCF yield of 6.88%, the current FCF yield is approximately -33.44% lower. Relative to its 5-year average FCF yield of 8.15% , the current FCF yield is about -43.84% lower.
9.76
P/B
Median3y
7.43
Median5y
6.81
4.58
FCF Yield
Median3y
6.88
Median5y
8.15
Competitors Valuation Multiple
The average P/S ratio for IBM's competitors is 7.96, providing a benchmark for relative valuation. International Business Machines Corp Corp (IBM) exhibits a P/S ratio of 3.92, which is -50.7% above the industry average. Given its robust revenue growth of 9.11%, this premium appears unsustainable.
Performance Decomposition
1Y
3Y
5Y
Market capitalization of IBM increased by 16.82% over the past 1 year. The primary factor behind the change was an increase in P/E Change from 5.61 to 34.81.
The secondary factor is the Revenue Growth, contributed 9.11%to the performance.
Overall, the performance of IBM in the past 1 year is driven by P/E Change. Which is more unsustainable.
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Frequently Asked Questions
Is International Business Machines Corp (IBM) currently overvalued or undervalued?
International Business Machines Corp (IBM) is now in the Fair zone, suggesting that its current forward PE ratio of 24.11 is considered Fairly compared with the five-year average of 16.80. The fair price of International Business Machines Corp (IBM) is between 261.32 to 344.44 according to relative valuation methord.
What is International Business Machines Corp (IBM) fair value?
IBM's fair value is calculated using relative valuation, based on historical P/E and P/S ranges and their premiums/discounts relative to a competitor average , adjusted by weights. The fair price of International Business Machines Corp (IBM) is between 261.32 to 344.44 according to relative valuation methord.
How does IBM's valuation metrics compare to the industry average?
The average P/S ratio for IBM's competitors is 7.96, providing a benchmark for relative valuation. International Business Machines Corp Corp (IBM) exhibits a P/S ratio of 3.92, which is -50.70% above the industry average. Given its robust revenue growth of 9.11%, this premium appears unsustainable.
What is the current P/B ratio for International Business Machines Corp (IBM) as of Jan 09 2026?
As of Jan 09 2026, International Business Machines Corp (IBM) has a P/B ratio of 9.76. This indicates that the market values IBM at 9.76 times its book value.
What is the current FCF Yield for International Business Machines Corp (IBM) as of Jan 09 2026?
As of Jan 09 2026, International Business Machines Corp (IBM) has a FCF Yield of 4.58%. This means that for every dollar of International Business Machines Corp’s market capitalization, the company generates 4.58 cents in free cash flow.
What is the current Forward P/E ratio for International Business Machines Corp (IBM) as of Jan 09 2026?
As of Jan 09 2026, International Business Machines Corp (IBM) has a Forward P/E ratio of 24.11. This means the market is willing to pay $24.11 for every dollar of International Business Machines Corp’s expected earnings over the next 12 months.
What is the current Forward P/S ratio for International Business Machines Corp (IBM) as of Jan 09 2026?
As of Jan 09 2026, International Business Machines Corp (IBM) has a Forward P/S ratio of 3.92. This means the market is valuing IBM at $3.92 for every dollar of expected revenue over the next 12 months.