Definitive Analysis
Definitive Analysis
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International Business Machines Corporation (IBM)

Company Dividend Discount ModelIndustry: Information Technology ServicesSector: Technology

Valuation Snapshot

Stable Growth$69.30 - $103.25$85.46
Multi-Stage$109.61 - $119.84$114.63
Blended Fair Value$100.05
Current Price$282.16
Upside-64.54%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS1.50%3.72%6.506.396.296.216.136.035.995.825.565.18
YoY Growth--1.77%1.55%1.35%1.24%1.58%0.72%2.91%4.76%7.33%14.82%
Dividend Yield--2.61%3.36%4.80%4.77%4.81%5.69%4.38%3.97%3.34%3.58%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)7,907.00
(-) Cash Dividends Paid (M)6,227.00
(=) Cash Retained (M)1,680.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)1,581.40988.38593.03
Cash Retained (M)1,680.001,680.001,680.00
(-) Cash Required (M)-1,581.40-988.38-593.03
(=) Excess Retained (M)98.60691.631,086.98
(/) Shares Outstanding (M)945.85945.85945.85
(=) Excess Retained per Share0.100.731.15
LTM Dividend per Share6.586.586.58
(+) Excess Retained per Share0.100.731.15
(=) Adjusted Dividend6.697.317.73
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-0.50%0.50%1.50%
Fair Value$69.30$85.46$103.25
Upside / Downside-75.44%-69.71%-63.41%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)7,907.007,946.267,985.718,025.368,065.218,105.258,348.41
Payout Ratio78.75%81.00%83.25%85.50%87.75%90.00%92.50%
Projected Dividends (M)6,227.006,436.666,648.256,861.787,077.277,294.737,722.28

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-0.50%0.50%1.50%
Year 1 PV (M)5,841.185,899.895,958.60
Year 2 PV (M)5,475.045,585.655,697.36
Year 3 PV (M)5,128.115,284.295,443.61
Year 4 PV (M)4,799.834,995.725,197.55
Year 5 PV (M)4,489.624,719.824,959.36
PV of Terminal Value (M)77,939.6381,935.8686,094.35
Equity Value (M)103,673.41108,421.23113,350.83
Shares Outstanding (M)945.85945.85945.85
Fair Value$109.61$114.63$119.84
Upside / Downside-61.15%-59.37%-57.53%

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