IBM
IBM's revenue rose 7.6% to $67.5 billion in fiscal 2025. Its net margin was 15.7%, up from 9.6% a year earlier. Free cash flow was $12.1 billion, down 2.4%. It paid out $6.3 billion in dividends and buybacks, 52% of free cash flow. The diluted share count rose 1.2%.
Net margin is net income as a share of revenue. Free cash flow is cash from operations minus capital spending. Return on capital is after-tax operating income as a share of the money invested in the business: debt plus equity, minus cash. Market cap is the last closing share price times the latest diluted share count, so it is approximate. P/E is the last close divided by diluted earnings per share over the last four quarters, or the latest fiscal year where the quarters aren't available; there is none when the company made a loss.
What IBM does
IBM sells software, consulting services and computer hardware to businesses and governments in more than 175 countries. Its products help large organizations run their computer systems across their own data centers and public clouds, a mix known as hybrid cloud, and put artificial intelligence to work in their operations.
IBM reports four segments. Software, the largest, had revenue of $29,962 million in 2025; it includes Red Hat's Linux and OpenShift software, automation and security tools, databases and AI tools, and software for the transaction systems that banks, airlines and retailers depend on. Consulting, with revenue of $21,055 million, helps clients plan and carry out technology projects and runs some of their systems and business processes for them. Infrastructure, with revenue of $15,718 million, sells IBM Z mainframes, Power servers, storage and cloud computing capacity, and maintains clients' equipment. A small Financing segment lends to clients and business partners buying IBM products. IBM names Alphabet, Amazon, Microsoft, Oracle and SAP among its software rivals, Accenture and Capgemini in consulting, and Dell and Hewlett-Packard Enterprise in hardware.
IBM and its wholly owned subsidiaries had about 264,300 employees at the end of 2025. It completed ten acquisitions that year, the largest being HashiCorp, a maker of automation and security software, and announced plans to buy Confluent, which makes software for handling streams of live data.
Its biggest risks, as it describes them
- Clients cutting their technology budgets if the economy weakens or their buying habits shift.
- Failing to keep up with fast-changing technology such as AI and hybrid cloud, or bets on new areas not paying off.
- Acquisitions that are hard to combine with its business, fall short of their goals or add debt.
- Its reliance on skilled workers who are in short supply, and on outside partners and sales channels.
- Changes in currencies and in the funding of its US and foreign pension plans that could hurt its results.
Charts show fiscal years, from the 10-K filings.
Revenue and margins
Net income and earnings per share
From fiscal 2016 to 2025, earnings per share fell 1.1% a year and net income 1.3% a year, while buybacks cut the share count by 1%.
Returns on capital
Cash flow
Payouts and share count
Valuation
Two ways to value IBM yourself, both starting from its filings: a discounted cash flow model and the price-to-earnings method.
What IBM says to expect
- Full year 2026: revenue growth
The company continues to expect full-year constant currency revenue growth in the range of four-to-five percent.
- Full year 2026: free cash flow
The company now expects full-year free cash flow to increase by more than $1 billion year-over-year
Discounted cash flow (DCF)
A discounted cash flow (DCF) model values a business as the cash it may generate in future, discounted back to today. The starting figures come from IBM's 10-K (or, for net cash and shares, its latest 10-Q) and the assumptions are yours: start from one of three example scenarios, then change any figure to see what it implies for a share, and how that compares with the last share price.
Value per share on three example scenarios, from IBM's fiscal 2025 free cash flow of $12.1B, net cash of −$53.3B at December 31, 2025 and 949 million diluted shares, from its filings. The scenarios are fitted to IBM: the base scenario's growth in years 1 to 5 is its revenue growth over the last 3 years, 3.7% a year; the cautious and optimistic ones are lower and higher, and growth in years 6 to 10 is halfway to the long-run rate. The base scenario's discount rate is 9% for a business of moderate risk (IT Consulting & Other Services); the cautious and optimistic ones use a point more and a point less. Select one to load it into the calculator. These are the model's arithmetic on those assumptions, not a forecast or a price target.
- Last close, October 26, 2026
- $253.44
- Value on these assumptions, against the last close
- —
- Cash flows in years 1 to 10, valued today
- —
- Everything after year 10, valued today
- —
- Plus net cash
- —
- Share of value from after year 10
How the value changes with two assumptions
Price-to-earnings (P/E) method
Another common way to value a company is to multiply its earnings per share by a price-to-earnings (P/E) multiple: the number of years of today's earnings an investor pays for a share. A higher multiple usually means investors expect earnings to grow. Choose a multiple, for example from similar companies, to see the value it gives.
Value per share on three example scenarios, from IBM's earnings per share of $11.75 (over the last four quarters). Each grows earnings for a year at the cash flow scenarios' rates and applies a multiple to next year's earnings: 21.6×, the middle of IBM's own P/E today, its peers' median and its sector's median (IBM's own P/E today) for the base scenario, 20% less and more for the cautious and optimistic ones. The price is brought back a year at 10%, 9% and 8%. Select one to load it into the calculator. These are the model's arithmetic on those assumptions, not a forecast or a price target.
- Last close, October 26, 2026
- $253.44
- Value at this multiple, against the last close
- —
- IBM's P/E at the last close
- 21.6×
| Company | Last close | Earnings per share | P/E today |
|---|---|---|---|
| KyndrylKD | $14.68 | $0.37 | 39.7× |
| IBMIBM | $253.44 | $11.75 | 21.6× |
| DXC TechnologyDXC | $16.30 | $0.76 | 21.4× |
| AccentureACN | $247.23 | $13.56 | 18.2× |
| CognizantCTSH | $69.34 | $4.60 | 15.1× |
Balance sheet
| Fiscal year end | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Cash and short-term investments | 7.2 | 8.7 | 13.4 | 14.6 | 14.4 |
| Debt incl. finance leases | 58.5 | 55.7 | 63.0 | 60.0 | 67.7 |
| Net debt (negative means net cash) | 51.2 | 47.0 | 49.5 | 45.4 | 53.3 |
| Net debt to EBITDA | 4.1x | 6.5x | 3.4x | 3.7x | 3.1x |
| Debt to equity | 3.1x | 2.5x | 2.8x | 2.2x | 2.1x |
| Interest coverage | 5.2x | 1.9x | 6.4x | 4.4x | 6.3x |
| Current ratio | 0.9x | 0.9x | 1.0x | 1.0x | 1.0x |
| Quick ratio | 0.8x | 0.9x | 0.9x | 1.0x | 0.9x |
Insider trades
Over the 12 months between October 27, 2025 and October 26, 2026, 3 insiders bought $417,157 of IBM shares on the open market, and 1 insider sold $5.8 million.
| Date | Insider | Trade | Shares | Price | Value | Filing |
|---|---|---|---|---|---|---|
| Aug 26, 2026 | Robert David ThomasSenior Vice President | Sold | 25,000 | $230.32 | $5.8 million | Form 4 |
| Feb 25, 2026 | Michael MiebachDirector | Bought | 434 | $233.33 | $101,265 | Form 4 |
| Feb 25, 2026 | Michelle J HowardDirector | Bought | 50 | $237.83 | $11,892 | Form 4 |
| Jan 30, 2026 | David N FarrDirector | Bought | 1,000 | $304.00 | $304,000 | Form 4 |
Piotroski F-score
The F-score counts how many of nine simple tests of profitability, funding and efficiency a company passed in a year (Piotroski, 2000). The more tests passed, the stronger the year: 8 or 9 is strong, 0 to 2 weak. Companies that report no gross profit are scored on the other eight.
| Test | FY23 | FY24 | FY25 |
|---|---|---|---|
| Net income is positive | Pass | Pass | Pass |
| Cash from operations is positive | Pass | Pass | Pass |
| Return on assets rose | Pass | Fail | Pass |
| Cash from operations exceeds net income | Pass | Pass | Pass |
| Debt fell relative to assets | Fail | Pass | Fail |
| Current ratio rose | Pass | Pass | Fail |
| Share count didn't rise | Fail | Fail | Fail |
| Gross margin rose | Pass | Pass | Pass |
| Revenue rose relative to assets | Pass | Fail | Pass |
| F-score | 7 of 9 | 6 of 9 | 6 of 9 |
| Accruals ratio | −4.9% | −5.5% | −1.8% |
Compare
Put IBM side by side with any other company we cover: revenue, growth, margins, cash flow and returns, with ten years of charts.
Similar companies
| Company | Year | Revenue growth | Operating margin | Free cash flow margin | Return on capital | Net debt to EBITDA | F-score | Compare |
|---|---|---|---|---|---|---|---|---|
| IBM | FY25 | 7.6% | — | 17.9% | 15.4% | 3.1x | 6 | |
| Accenture | FY26 | 6.5% | 15.4% | 15.7% | 30.6% | −0.2x | 6 | Compare |
| Cognizant | FY25 | 7.0% | 16.1% | 12.3% | 16.1% | −0.3x | 6 | Compare |
| Kyndryl | FY26 | 0.2% | — | 2.2% | 7.8% | 1.8x | 6 | Compare |
| DXC Technology | FY26 | −1.8% | 7.7% | 8.2% | 9.2% | 0.8x | 7 | Compare |
10 years of figures
| Fiscal year | FY16 | FY17 | FY18 | FY19 | FY20 | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | ||||||||||
| Revenue | 79.9 | 79.1 | 79.6 | 57.7 | 55.2 | 57.4 | 60.5 | 61.9 | 62.8 | 67.5 |
| Revenue growth | −2.2% | −1.0% | 0.6% | −27.5% | −4.4% | 3.9% | 5.5% | 2.2% | 1.4% | 7.6% |
| Gross profit | 38.5 | 36.9 | 36.9 | 31.5 | 30.9 | 31.5 | 32.7 | 34.3 | 35.6 | 39.3 |
| Research and development | 5.7 | 5.6 | 5.4 | 5.9 | 6.3 | 6.5 | 6.6 | 6.8 | 7.5 | 8.3 |
| Operating income | — | — | — | — | — | — | — | — | — | — |
| Net income | 11.9 | 5.8 | 8.7 | 9.4 | 5.6 | 5.7 | 1.6 | 7.5 | 6.0 | 10.6 |
| Diluted EPS (US$) | 12.38 | 6.14 | 9.52 | 10.56 | 6.23 | 6.35 | 1.80 | 8.14 | 6.43 | 11.17 |
| Diluted shares (millions) | 959 | 937 | 916 | 893 | 897 | 905 | 912 | 922 | 937 | 949 |
| Cash flow | ||||||||||
| Cash from operations | 17.1 | 16.7 | 15.2 | 14.8 | 18.2 | 12.8 | 10.4 | 13.9 | 13.4 | 13.2 |
| Capital expenditure | 3.6 | 3.2 | 3.4 | 2.3 | 2.6 | 2.1 | 1.3 | 1.2 | 1.0 | 1.1 |
| Free cash flow | 13.5 | 13.5 | 11.9 | 12.5 | 15.6 | 10.7 | 9.1 | 12.7 | 12.4 | 12.1 |
| Dividends paid | 5.3 | 5.5 | 5.7 | 5.7 | 5.8 | 5.9 | 5.9 | 6.0 | 6.1 | 6.3 |
| Share buybacks | 3.5 | 4.3 | 4.4 | 1.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Acquisitions | 5.7 | 0.5 | 0.1 | 32.6 | 0.3 | 3.3 | 2.3 | 5.1 | 3.3 | 8.3 |
| Stock-based compensation | 0.5 | 0.5 | 0.5 | 0.7 | 0.9 | 1.0 | 1.0 | 1.1 | 1.3 | 1.7 |
| Balance sheet at fiscal year end | ||||||||||
| Cash and short-term investments | 8.5 | 12.6 | 12.0 | 8.9 | 13.8 | 7.2 | 8.7 | 13.4 | 14.6 | 14.4 |
| Debt incl. finance leases | 40.9 | 45.1 | 52.9 | 70.4 | 68.3 | 58.5 | 55.7 | 63.0 | 60.0 | 67.7 |
| Total assets | 117.5 | 125.4 | 123.4 | 152.2 | 156.0 | 132.0 | 127.2 | 135.2 | 137.2 | 151.9 |
| Total liabilities | 99.1 | 107.6 | 106.5 | 131.2 | 135.2 | 113.0 | 105.2 | 112.6 | 109.8 | 119.1 |
| Shareholders' equity | 18.2 | 17.6 | 16.8 | 20.8 | 20.6 | 18.9 | 21.9 | 22.5 | 27.3 | 32.6 |
| Margins and ratios | ||||||||||
| Gross margin | 48.2% | 46.7% | 46.4% | 54.6% | 55.9% | 54.9% | 54.0% | 55.5% | 56.6% | 58.2% |
| Operating margin | — | — | — | — | — | — | — | — | — | — |
| Net margin | 14.9% | 7.3% | 11.0% | 16.3% | 10.1% | 10.0% | 2.7% | 12.1% | 9.6% | 15.7% |
| Free cash flow margin | 16.9% | 17.1% | 14.9% | 21.6% | 28.2% | 18.7% | 15.0% | 20.5% | 19.8% | 17.9% |
| Return on capital | 25.9% | 12.0% | 17.2% | 12.1% | 4.9% | 8.0% | 3.4% | 12.6% | 10.4% | 15.4% |
| Return on equity | 73.0% | 32.1% | 50.8% | 50.1% | 27.0% | 29.1% | 8.0% | 33.7% | 24.2% | 35.3% |
| Return on assets | 10.4% | 4.7% | 7.0% | 6.8% | 3.6% | 4.0% | 1.3% | 5.7% | 4.4% | 7.3% |
| Net debt to EBITDA | 1.9x | 2.0x | 2.5x | 4.2x | 5.2x | 4.1x | 6.5x | 3.4x | 3.7x | 3.1x |