Definitive Analysis
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Definitive Analysis

Financial Statements

Ticker

Industry

Sector

International Business Machines Corporation (IBM)

Company Dividend Discount ModelIndustry: Information Technology ServicesSector: Technology

Valuation Snapshot

Stable Growth$79.98 - $124.19$100.43
Multi-Stage$138.83 - $152.09$145.34
Blended Fair Value$122.88
Current Price$282.16
Upside-56.45%
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 Rate7.82%7.82%7.82%
Growth Rate-0.50%0.50%1.50%
Fair Value$79.98$100.43$124.19
Upside / Downside-71.65%-64.41%-55.99%

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 Rate7.82%7.82%7.82%
Growth Rate-0.50%0.50%1.50%
Year 1 PV (M)5,910.625,970.036,029.43
Year 2 PV (M)5,605.995,719.255,833.63
Year 3 PV (M)5,313.185,475.005,640.07
Year 4 PV (M)5,032.185,237.565,449.16
Year 5 PV (M)4,762.915,007.125,261.25
PV of Terminal Value (M)104,688.89110,056.64115,642.35
Equity Value (M)131,313.78137,465.60143,855.89
Shares Outstanding (M)945.85945.85945.85
Fair Value$138.83$145.34$152.09
Upside / Downside-50.80%-48.49%-46.10%

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