International Business Machines Corporation

IBM

TechnologyInformation Technology ServicesNYSE

$223.55

Market Cap: $210.11B

International Business Machines Corporation (IBM) Valuation Summary

Updated Apr 27, 2026 22:22

Model	Range	Fair Value	Upside
▸ Discounted Cash Flow
Growth Exit 5Y	$77.51 – $354.10	$140.36	-38.5%
Growth Exit 10Y	$87.34 – $359.64	$150.05	-34.2%
EBITDA Exit 5Y	$47.16 – $153.64	$95.95	-57.9%
EBITDA Exit 10Y	$64.76 – $179.78	$113.84	-50.1%
▸ Trading Multiples
P/E	$162.63 – $386.47	$183.61	-19.5%
EV/EBITDA	$92.28 – $380.00	$137.64	-39.6%
EV/Revenue	$51.50 – $406.45	$158.72	-30.4%
▸ PEG
PEG Fair Value	$99.22 – $99.22	$99.22	-56.5%
▸ Earnings Power Value
Earnings Power Value	$33.24 – $74.74	$50.09	-78.0%
▸ Dividend Discount
Dividend Discount	$65.72 – $131.49	$87.40	-61.7%

Valuation History

DCF Analysis

Fair Value

$140.36

Market Price

$223.55

Upside / Downside

-37.2%

Verdict

Overvalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project International Business Machines Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.8% to 2.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 56, DIO 19). At a 8.0% WACC with mid-year discounting, the terminal value (75% of enterprise value) is derived from the Gordon Growth Model on Year 6 FCFF at a 2.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $140.36 per share, suggesting IBM is overvalued by 37.2% at the current price of $223.55.

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	9,971
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,075
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,349
EBITDA	12,103	12,475	13,183	13,539	14,044	14,395

(−) Tax	0	0	0	0	0	0
(−) CapEx	2,299	2,405	2,546	2,593	2,667	2,733
(−) ΔWC	-3,775	475	632	213	329	337
Free Cash Flow (FCFF)	13,579	9,595	10,004	10,732	11,048	11,324

Terminal Value						206,648
WACC / Discount Rate	8.0%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	140,772

Enterprise Value	186,673
Projection Period	45,901	24.6%
Terminal Value	140,772	75.4%

(−) Current Net Debt	53,513

Equity Value	133,160
(/) Outstanding Shares	949

Fair Price	$140.36

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
6.0%	$193	$218	$251	$294	$354
7.0%	$148	$164	$183	$207	$238
8.0%	$117	$128	$140	$155	$173
9.0%	$95	$102	$111	$121	$133
10.0%	$78	$83	$89	$96	$105

Current price: $223.55. Green = undervalued, Red = overvalued.

Fair Value

$150.05

Market Price

$223.55

Upside / Downside

-32.9%

Verdict

Overvalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project International Business Machines Corporation's cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 5.8% to 3.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 56, DIO 19). At a 8.0% WACC with mid-year discounting, the terminal value (59% of enterprise value) is derived from the Gordon Growth Model on Year 11 FCFF at a 2.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $150.05 per share, suggesting IBM is overvalued by 32.9% at the current price of $223.55.

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	10,114	10,497	10,873	11,242	11,601	11,891
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,105	2,184	2,263	2,339	2,414	2,474
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,502	2,597	2,691	2,778	2,876	2,948
EBITDA	12,103	12,475	13,183	13,539	14,044	14,721	15,277	15,827	16,359	16,891	17,313

(−) Tax	0	0	0	0	0	0	0	0	0	0	0
(−) CapEx	2,299	2,405	2,546	2,593	2,667	2,773	2,877	2,981	3,082	3,180	3,260
(−) ΔWC	-3,775	475	632	213	329	476	471	463	454	442	453
Free Cash Flow (FCFF)	13,579	9,595	10,004	10,732	11,048	11,472	11,929	12,383	12,823	13,268	13,600

Terminal Value											248,177
WACC / Discount Rate	8.0%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	7,521	7,242	6,962	6,677	6,398	115,168

Enterprise Value	195,869
Projection Period	80,701	41.2%
Terminal Value	115,168	58.8%

(−) Current Net Debt	53,513

Equity Value	142,356
(/) Outstanding Shares	949

Fair Price	$150.05

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
6.0%	$215	$238	$267	$305	$360
7.0%	$166	$179	$195	$216	$242
8.0%	$131	$140	$150	$162	$177
9.0%	$106	$112	$119	$127	$136
10.0%	$87	$91	$96	$101	$107

Current price: $223.55. Green = undervalued, Red = overvalued.

Fair Value

$95.96

Market Price

$223.55

Upside / Downside

-57.1%

Verdict

Overvalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project International Business Machines Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.8% to 2.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 56, DIO 19). At a 8.0% WACC with mid-year discounting, the terminal value (68% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $95.95 per share, suggesting IBM is overvalued by 57.1% at the current price of $223.55.

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

EV/EBITDA Exit Multiple

10.06x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	9,971
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,075
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,349
EBITDA	12,103	12,475	13,183	13,539	14,044	14,395

(−) Tax	0	0	0	0	0	—
(−) CapEx	2,299	2,405	2,546	2,593	2,667	—
(−) ΔWC	-3,775	475	632	213	329	—
Free Cash Flow (FCF)	13,579	9,595	10,004	10,732	11,048	—

Peers' EBITDA Multiple						10.1x
Terminal Value						144,812
WACC / Discount Rate	7.98%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	98,648

Enterprise Value	144,549
Projection Period	45,901	31.8%
Terminal Value	98,648	68.2%

(−) Current Net Debt	53,513
Equity Value	91,036
(÷) Outstanding Shares	949M
Fair Price	$96	-57.1%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	6.1x	8.1x	10.1x	12.1x	14.1x
6.0%	$63	$86	$108	$131	$154
7.0%	$59	$80	$102	$124	$145
8.0%	$55	$75	$96	$117	$137
9.0%	$51	$71	$90	$110	$130
10.0%	$47	$66	$85	$104	$123

Current price: $223.55. Green = undervalued, Red = overvalued.

Based on default parameters

Fair Value

$113.85

Market Price

$223.55

Upside / Downside

-49.1%

Verdict

Overvalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project International Business Machines Corporation's cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 5.8% to 3.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 56, DIO 19). At a 8.0% WACC with mid-year discounting, the terminal value (50% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.1x to Year 11 EBITDA. After subtracting net debt, the equity value implies a fair price of $113.84 per share, suggesting IBM is overvalued by 49.1% at the current price of $223.55.

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

EV/EBITDA Exit Multiple

10.06x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	10,114	10,497	10,873	11,242	11,601	11,891
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,105	2,184	2,263	2,339	2,414	2,474
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,502	2,597	2,691	2,778	2,876	2,948
EBITDA	12,103	12,475	13,183	13,539	14,044	14,721	15,277	15,827	16,359	16,891	17,313

(−) Tax	0	0	0	0	0	0	0	0	0	0	—
(−) CapEx	2,299	2,405	2,546	2,593	2,667	2,773	2,877	2,981	3,082	3,180	—
(−) ΔWC	-3,775	475	632	213	329	476	471	463	454	442	—
Free Cash Flow (FCF)	13,579	9,595	10,004	10,732	11,048	11,472	11,929	12,383	12,823	13,268	—

Peers' EBITDA Multiple											10.1x
Terminal Value											174,167
WACC / Discount Rate	7.98%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	7,521	7,242	6,962	6,677	6,398	80,823

Enterprise Value	161,524
Projection Period	80,701	50.0%
Terminal Value	80,823	50.0%

(−) Current Net Debt	53,513
Equity Value	108,011
(÷) Outstanding Shares	949M
Fair Price	$114	-49.1%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	6.1x	8.1x	10.1x	12.1x	14.1x
6.0%	$98	$119	$139	$159	$180
7.0%	$89	$107	$126	$144	$163
8.0%	$80	$97	$114	$131	$148
9.0%	$72	$87	$103	$118	$134
10.0%	$65	$79	$93	$107	$121

Current price: $223.55. Green = undervalued, Red = overvalued.

Based on default parameters

Trading Multiples

Fair Value

$183.88

Market Price

$223.55

Upside / Downside

-17.7%

Verdict

Overvalued

Using the industry peer median P/E Multiples multiple (trailing + forward), International Business Machines Corporation (IBM) has a fair value of $183.88 based on 7 comparable companies in the Information Technology Services industry.

P/E Valuation — Information Technology Services

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing P/E	Forward P/E
International Business Machines CorporationIBM	212,082	20.0x	18.0x
Micron Technology, Inc.MU	591,562	69.1x	9.2x
Cisco Systems, Inc.CSCO	348,618	34.6x	23.8x
Salesforce, Inc.CRM	171,169	23.1x	15.3x
Accenture plcACN	108,907	14.6x	12.8x
Infosys LimitedINFY	49,742	14.8x	16.5x
Wipro LimitedWIT	21,477	13.1x	—
EPAM Systems, Inc.EPAM	6,136	17.3x	10.8x
Industry Median		17.3x	14.0x
(*) Profit after tax		10,593	11,804
Equity Value		183,344	165,554
(/) Outstanding shares		949	949
Fair Price		$193	$175

Selected Fair Value (avg of trailing + forward)

$183.88

-17.7%

Fair Value

$137.66

Market Price

$223.55

Upside / Downside

-38.4%

Verdict

Overvalued

Using the industry peer median EV/EBITDA multiple (trailing + forward), International Business Machines Corporation (IBM) has a fair value of $137.66 based on 7 comparable companies in the Information Technology Services industry.

EV/EBITDA Valuation — Information Technology Services

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/EBITDA	Forward EV/EBITDA
International Business Machines CorporationIBM	212,082	15.4x	14.5x
Micron Technology, Inc.MU	591,562	32.3x	11.3x
Cisco Systems, Inc.CSCO	348,618	24.0x	25.3x
Salesforce, Inc.CRM	171,169	13.8x	13.8x
Accenture plcACN	108,907	8.2x	7.7x
Infosys LimitedINFY	49,742	9.5x	10.0x
Wipro LimitedWIT	21,477	10.1x	—
EPAM Systems, Inc.EPAM	6,136	7.9x	9.2x
Industry Median		10.1x	10.6x
(*) EBITDA		17,284	18,290
= Enterprise Value		173,861	194,363
(-) Net Debt		53,513	53,513
Equity Value		120,348	140,850
(/) Outstanding shares		949	949
Fair Price		$127	$148

Selected Fair Value (avg of trailing + forward)

$137.66

-38.4%

Fair Value

$158.75

Market Price

$223.55

Upside / Downside

-29.0%

Verdict

Overvalued

Using the industry peer median EV/Revenue multiple (trailing + forward), International Business Machines Corporation (IBM) has a fair value of $158.75 based on 7 comparable companies in the Information Technology Services industry.

EV/Revenue Valuation — Information Technology Services

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/Revenue	Forward EV/Revenue
International Business Machines CorporationIBM	212,082	3.9x	3.7x
Micron Technology, Inc.MU	591,562	16.0x	5.6x
Cisco Systems, Inc.CSCO	348,618	6.5x	6.9x
Salesforce, Inc.CRM	171,169	4.4x	4.4x
Accenture plcACN	108,907	1.5x	1.4x
Infosys LimitedINFY	49,742	2.4x	2.5x
Wipro LimitedWIT	21,477	1.9x	—
EPAM Systems, Inc.EPAM	6,136	0.9x	1.1x
Industry Median		2.4x	3.4x
(*) Revenue		67,535	71,467
= Enterprise Value		162,047	246,196
(-) Net Debt		53,513	53,513
Equity Value		108,534	192,683
(/) Outstanding shares		949	949
Fair Price		$114	$203

Selected Fair Value (avg of trailing + forward)

$158.75

-29.0%

PEG Fair Value

Fair Value

$99.22

Market Price

$223.55

Upside / Downside

-55.6%

Verdict

Overvalued

Using the PEG framework with analyst consensus forward EPS growth of 8.0% plus 2.9% dividend yield, the company has a fair value of $99.22 based on NTM EPS (FY2026) of $12.40. The current PEG ratio is 2.86.

PEG Ratio

2.86Expensive

01.02.03.0+

PEG = P/E ÷ (Growth + Yield) = 18.4 ÷ (3.5% + 2.9%) = 2.86

PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.

Growth Category: Slow GrowerPEG less reliable

PEG tends to undervalue slow growers — consider dividend yield and asset value instead.

Fair Value Calculation

EPS Growth RateForward	3.5%
Dividend Yield	+2.9%
Adjusted Growth (clamped 8–25%)Clamped	8.0%
Fair P/E	8.0x
NTM EPS (FY2026)	$12.40
Fair Value	$99.22

Growth Analysis

Forward GrowthActive

Period	EPS Est.	Growth	Analysts
FY2025 (actual)	$11.17	—	—
FY2026E	$12.40	+11.0%	15
FY2027E	$13.40	+8.0%	15
FY2028E	$14.76	+10.2%	12
FY2029E	$14.20	-3.8%	11
FY2030E	$13.27	-6.5%	6

5Y Forward EPS CAGR: 3.5%

Historical Growth

Year	Net Income	EPS	YoY
FY2021	$5.7B	$6.35	—
FY2022	$1.6B	$1.80	-71.7%
FY2023	$7.5B	$8.14	+352.2%
FY2024	$6.0B	$6.43	-21.0%
FY2025	$10.6B	$11.17	+73.7%

4Y Historical EPS CAGR: 15.2%

Earnings Power Value

Fair Value

$50.09

Market Price

$223.55

Upside / Downside

-77.6%

Verdict

Overvalued

Using the Earnings Power Value framework with a WACC of 8.0% and normalized earnings of $8.1B, the company has a fair value of $50.09 per share. The EPV range is $33.24 – $74.74 based on WACC sensitivity (6.5% – 9.5%).

Currency: USD Millions

	Low	Selected	High
Normalized Earnings	8,062	8,062	8,062
(/) WACC	9.5%	8.0%	6.5%
Enterprise Value	85,043	101,029	124,416
(-) Net debt	53,513	53,513	53,513
Equity Value	31,530	47,516	70,903
(/) Outstanding shares	949	949	949
Fair Price	$33.24	$50.09	$74.74

Dividend Discount Model

Fair Value

$87.40

Market Price

$223.55

Upside / Downside

-60.9%

Verdict

Overvalued

Using the Two-Stage Dividend Discount Model with a Cost of Equity of 9.8% and projected dividend growth of 1.1%, the fair value is $87.40 per share. The DDM range is $65.72 – $131.49 based on sensitivity analysis across Cost of Equity and growth rate assumptions.

Dividend Profile

Current DPS

$6.59

Dividend Yield

2.92%

Payout Ratio

59.0%

Dividend Coverage

1.69x

FCF Payout Ratio54.0%

DPS CAGR (4Y)0.4%

Historical Dividends Per Share

Year	DPS	Payout Ratio	YoY Growth
2025	$6.59	59.0%	+0.5%
2024	$6.56	102.1%	+0.1%
2023	$6.55	80.5%	+0.5%
2022	$6.52	362.7%	+0.5%
2021	$6.49	102.2%	—

Dividend Projections (5-Year)

Year	Projected DPS	Growth	Discount Factor	Present Value
2026	$6.66	1.1%	0.9110	$6.07
2027	$6.73	1.1%	0.8300	$5.59
2028	$6.80	1.1%	0.7561	$5.14
2029	$6.88	1.1%	0.6888	$4.74
2030	$6.95	1.1%	0.6275	$4.36
Terminal Value	$7.12 DPS	2.5%		$61.50

PV of Projected Dividends$25.90

PV of Terminal Value$61.50

Fair Value per Share$87.40

Sensitivity Analysis

Fair value under different Cost of Equity (rows) and DPS Growth Rate (columns) assumptions.

Ke \ Growth	0.0%	0.1%	1.1%	2.1%	3.1%
7.8%	$115	$115	$120	$126	$131
8.8%	$97	$97	$101	$106	$110
9.8%	$84	$84	$87	$91	$95
10.8%	$74	$74	$77	$80	$84
11.8%	$66	$66	$69	$72	$75

Disclaimer: Sweet Value Lab provides estimated intrinsic values for informational purposes only. This is not financial advice. All models rely on assumptions that may not reflect future performance. Always do your own research before making investment decisions.

International Business Machines Corporation (IBM) Valuation Summary

Updated Apr 27, 2026 22:22

Model	Range	Fair Value	Upside
▸ Discounted Cash Flow
Growth Exit 5Y	$77.51 – $354.10	$140.36	-38.5%
Growth Exit 10Y	$87.34 – $359.64	$150.05	-34.2%
EBITDA Exit 5Y	$47.16 – $153.64	$95.95	-57.9%
EBITDA Exit 10Y	$64.76 – $179.78	$113.84	-50.1%
▸ Trading Multiples
P/E	$162.63 – $386.47	$183.61	-19.5%
EV/EBITDA	$92.28 – $380.00	$137.64	-39.6%
EV/Revenue	$51.50 – $406.45	$158.72	-30.4%
▸ PEG
PEG Fair Value	$99.22 – $99.22	$99.22	-56.5%
▸ Earnings Power Value
Earnings Power Value	$33.24 – $74.74	$50.09	-78.0%
▸ Dividend Discount
Dividend Discount	$65.72 – $131.49	$87.40	-61.7%

Valuation History

DCF Analysis

Fair Value

$140.36

Market Price

$223.55

Upside / Downside

-37.2%

Verdict

Overvalued

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	9,971
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,075
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,349
EBITDA	12,103	12,475	13,183	13,539	14,044	14,395

(−) Tax	0	0	0	0	0	0
(−) CapEx	2,299	2,405	2,546	2,593	2,667	2,733
(−) ΔWC	-3,775	475	632	213	329	337
Free Cash Flow (FCFF)	13,579	9,595	10,004	10,732	11,048	11,324

Terminal Value						206,648
WACC / Discount Rate	8.0%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	140,772

Enterprise Value	186,673
Projection Period	45,901	24.6%
Terminal Value	140,772	75.4%

(−) Current Net Debt	53,513

Equity Value	133,160
(/) Outstanding Shares	949

Fair Price	$140.36

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
6.0%	$193	$218	$251	$294	$354
7.0%	$148	$164	$183	$207	$238
8.0%	$117	$128	$140	$155	$173
9.0%	$95	$102	$111	$121	$133
10.0%	$78	$83	$89	$96	$105

Current price: $223.55. Green = undervalued, Red = overvalued.

Fair Value

$150.05

Market Price

$223.55

Upside / Downside

-32.9%

Verdict

Overvalued

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	10,114	10,497	10,873	11,242	11,601	11,891
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,105	2,184	2,263	2,339	2,414	2,474
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,502	2,597	2,691	2,778	2,876	2,948
EBITDA	12,103	12,475	13,183	13,539	14,044	14,721	15,277	15,827	16,359	16,891	17,313

(−) Tax	0	0	0	0	0	0	0	0	0	0	0
(−) CapEx	2,299	2,405	2,546	2,593	2,667	2,773	2,877	2,981	3,082	3,180	3,260
(−) ΔWC	-3,775	475	632	213	329	476	471	463	454	442	453
Free Cash Flow (FCFF)	13,579	9,595	10,004	10,732	11,048	11,472	11,929	12,383	12,823	13,268	13,600

Terminal Value											248,177
WACC / Discount Rate	8.0%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	7,521	7,242	6,962	6,677	6,398	115,168

Enterprise Value	195,869
Projection Period	80,701	41.2%
Terminal Value	115,168	58.8%

(−) Current Net Debt	53,513

Equity Value	142,356
(/) Outstanding Shares	949

Fair Price	$150.05

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
6.0%	$215	$238	$267	$305	$360
7.0%	$166	$179	$195	$216	$242
8.0%	$131	$140	$150	$162	$177
9.0%	$106	$112	$119	$127	$136
10.0%	$87	$91	$96	$101	$107

Current price: $223.55. Green = undervalued, Red = overvalued.

Fair Value

$95.96

Market Price

$223.55

Upside / Downside

-57.1%

Verdict

Overvalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project International Business Machines Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.8% to 2.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 56, DIO 19). At a 8.0% WACC with mid-year discounting, the terminal value (68% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $95.95 per share, suggesting IBM is overvalued by 57.1% at the current price of $223.55.

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

EV/EBITDA Exit Multiple

10.06x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	9,971
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,075
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,349
EBITDA	12,103	12,475	13,183	13,539	14,044	14,395

(−) Tax	0	0	0	0	0	—
(−) CapEx	2,299	2,405	2,546	2,593	2,667	—
(−) ΔWC	-3,775	475	632	213	329	—
Free Cash Flow (FCF)	13,579	9,595	10,004	10,732	11,048	—

Peers' EBITDA Multiple						10.1x
Terminal Value						144,812
WACC / Discount Rate	7.98%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	98,648

Enterprise Value	144,549
Projection Period	45,901	31.8%
Terminal Value	98,648	68.2%

(−) Current Net Debt	53,513
Equity Value	91,036
(÷) Outstanding Shares	949M
Fair Price	$96	-57.1%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	6.1x	8.1x	10.1x	12.1x	14.1x
6.0%	$63	$86	$108	$131	$154
7.0%	$59	$80	$102	$124	$145
8.0%	$55	$75	$96	$117	$137
9.0%	$51	$71	$90	$110	$130
10.0%	$47	$66	$85	$104	$123

Current price: $223.55. Green = undervalued, Red = overvalued.

Based on default parameters

Fair Value

$113.85

Market Price

$223.55

Upside / Downside

-49.1%

Verdict

Overvalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project International Business Machines Corporation's cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 5.8% to 3.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 69, DPO 56, DIO 19). At a 8.0% WACC with mid-year discounting, the terminal value (50% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.1x to Year 11 EBITDA. After subtracting net debt, the equity value implies a fair price of $113.84 per share, suggesting IBM is overvalued by 49.1% at the current price of $223.55.

FCFF Present Value Calculation

WACC

7.98%

3% – 20%

EV/EBITDA Exit Multiple

10.06x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	8,387	8,773	9,287	9,460	9,727	10,114	10,497	10,873	11,242	11,601	11,891
(−) Net Interest	1,745	1,826	1,933	1,969	2,024	2,105	2,184	2,263	2,339	2,414	2,474
(+) D&A	1,970	1,877	1,963	2,110	2,292	2,502	2,597	2,691	2,778	2,876	2,948
EBITDA	12,103	12,475	13,183	13,539	14,044	14,721	15,277	15,827	16,359	16,891	17,313

(−) Tax	0	0	0	0	0	0	0	0	0	0	—
(−) CapEx	2,299	2,405	2,546	2,593	2,667	2,773	2,877	2,981	3,082	3,180	—
(−) ΔWC	-3,775	475	632	213	329	476	471	463	454	442	—
Free Cash Flow (FCF)	13,579	9,595	10,004	10,732	11,048	11,472	11,929	12,383	12,823	13,268	—

Peers' EBITDA Multiple											10.1x
Terminal Value											174,167
WACC / Discount Rate	7.98%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	13,068	8,552	8,257	8,204	7,821	7,521	7,242	6,962	6,677	6,398	80,823

Enterprise Value	161,524
Projection Period	80,701	50.0%
Terminal Value	80,823	50.0%

(−) Current Net Debt	53,513
Equity Value	108,011
(÷) Outstanding Shares	949M
Fair Price	$114	-49.1%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	6.1x	8.1x	10.1x	12.1x	14.1x
6.0%	$98	$119	$139	$159	$180
7.0%	$89	$107	$126	$144	$163
8.0%	$80	$97	$114	$131	$148
9.0%	$72	$87	$103	$118	$134
10.0%	$65	$79	$93	$107	$121

Current price: $223.55. Green = undervalued, Red = overvalued.

Based on default parameters

Trading Multiples

Fair Value

$183.88

Market Price

$223.55

Upside / Downside

-17.7%

Verdict

Overvalued

P/E Valuation — Information Technology Services

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing P/E	Forward P/E
International Business Machines CorporationIBM	212,082	20.0x	18.0x
Micron Technology, Inc.MU	591,562	69.1x	9.2x
Cisco Systems, Inc.CSCO	348,618	34.6x	23.8x
Salesforce, Inc.CRM	171,169	23.1x	15.3x
Accenture plcACN	108,907	14.6x	12.8x
Infosys LimitedINFY	49,742	14.8x	16.5x
Wipro LimitedWIT	21,477	13.1x	—
EPAM Systems, Inc.EPAM	6,136	17.3x	10.8x
Industry Median		17.3x	14.0x
(*) Profit after tax		10,593	11,804
Equity Value		183,344	165,554
(/) Outstanding shares		949	949
Fair Price		$193	$175

Selected Fair Value (avg of trailing + forward)

$183.88

-17.7%

Fair Value

$137.66

Market Price

$223.55

Upside / Downside

-38.4%

Verdict

Overvalued

EV/EBITDA Valuation — Information Technology Services

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/EBITDA	Forward EV/EBITDA
International Business Machines CorporationIBM	212,082	15.4x	14.5x
Micron Technology, Inc.MU	591,562	32.3x	11.3x
Cisco Systems, Inc.CSCO	348,618	24.0x	25.3x
Salesforce, Inc.CRM	171,169	13.8x	13.8x
Accenture plcACN	108,907	8.2x	7.7x
Infosys LimitedINFY	49,742	9.5x	10.0x
Wipro LimitedWIT	21,477	10.1x	—
EPAM Systems, Inc.EPAM	6,136	7.9x	9.2x
Industry Median		10.1x	10.6x
(*) EBITDA		17,284	18,290
= Enterprise Value		173,861	194,363
(-) Net Debt		53,513	53,513
Equity Value		120,348	140,850
(/) Outstanding shares		949	949
Fair Price		$127	$148

Selected Fair Value (avg of trailing + forward)

$137.66

-38.4%

Fair Value

$158.75

Market Price

$223.55

Upside / Downside

-29.0%

Verdict

Overvalued

EV/Revenue Valuation — Information Technology Services

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/Revenue	Forward EV/Revenue
International Business Machines CorporationIBM	212,082	3.9x	3.7x
Micron Technology, Inc.MU	591,562	16.0x	5.6x
Cisco Systems, Inc.CSCO	348,618	6.5x	6.9x
Salesforce, Inc.CRM	171,169	4.4x	4.4x
Accenture plcACN	108,907	1.5x	1.4x
Infosys LimitedINFY	49,742	2.4x	2.5x
Wipro LimitedWIT	21,477	1.9x	—
EPAM Systems, Inc.EPAM	6,136	0.9x	1.1x
Industry Median		2.4x	3.4x
(*) Revenue		67,535	71,467
= Enterprise Value		162,047	246,196
(-) Net Debt		53,513	53,513
Equity Value		108,534	192,683
(/) Outstanding shares		949	949
Fair Price		$114	$203

Selected Fair Value (avg of trailing + forward)

$158.75

-29.0%

PEG Fair Value

Fair Value

$99.22

Market Price

$223.55

Upside / Downside

-55.6%

Verdict

Overvalued

PEG Ratio

2.86Expensive

01.02.03.0+

PEG = P/E ÷ (Growth + Yield) = 18.4 ÷ (3.5% + 2.9%) = 2.86

PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.

Growth Category: Slow GrowerPEG less reliable

PEG tends to undervalue slow growers — consider dividend yield and asset value instead.

Fair Value Calculation

EPS Growth RateForward	3.5%
Dividend Yield	+2.9%
Adjusted Growth (clamped 8–25%)Clamped	8.0%
Fair P/E	8.0x
NTM EPS (FY2026)	$12.40
Fair Value	$99.22

Growth Analysis

Forward GrowthActive

Period	EPS Est.	Growth	Analysts
FY2025 (actual)	$11.17	—	—
FY2026E	$12.40	+11.0%	15
FY2027E	$13.40	+8.0%	15
FY2028E	$14.76	+10.2%	12
FY2029E	$14.20	-3.8%	11
FY2030E	$13.27	-6.5%	6

5Y Forward EPS CAGR: 3.5%

Historical Growth

Year	Net Income	EPS	YoY
FY2021	$5.7B	$6.35	—
FY2022	$1.6B	$1.80	-71.7%
FY2023	$7.5B	$8.14	+352.2%
FY2024	$6.0B	$6.43	-21.0%
FY2025	$10.6B	$11.17	+73.7%

4Y Historical EPS CAGR: 15.2%

Earnings Power Value

Fair Value

$50.09

Market Price

$223.55

Upside / Downside

-77.6%

Verdict

Overvalued

Currency: USD Millions

	Low	Selected	High
Normalized Earnings	8,062	8,062	8,062
(/) WACC	9.5%	8.0%	6.5%
Enterprise Value	85,043	101,029	124,416
(-) Net debt	53,513	53,513	53,513
Equity Value	31,530	47,516	70,903
(/) Outstanding shares	949	949	949
Fair Price	$33.24	$50.09	$74.74

Dividend Discount Model

Fair Value

$87.40

Market Price

$223.55

Upside / Downside

-60.9%

Verdict

Overvalued

Dividend Profile

Current DPS

$6.59

Dividend Yield

2.92%

Payout Ratio

59.0%

Dividend Coverage

1.69x

FCF Payout Ratio54.0%

DPS CAGR (4Y)0.4%

Historical Dividends Per Share

Year	DPS	Payout Ratio	YoY Growth
2025	$6.59	59.0%	+0.5%
2024	$6.56	102.1%	+0.1%
2023	$6.55	80.5%	+0.5%
2022	$6.52	362.7%	+0.5%
2021	$6.49	102.2%	—

Dividend Projections (5-Year)

Year	Projected DPS	Growth	Discount Factor	Present Value
2026	$6.66	1.1%	0.9110	$6.07
2027	$6.73	1.1%	0.8300	$5.59
2028	$6.80	1.1%	0.7561	$5.14
2029	$6.88	1.1%	0.6888	$4.74
2030	$6.95	1.1%	0.6275	$4.36
Terminal Value	$7.12 DPS	2.5%		$61.50

PV of Projected Dividends$25.90

PV of Terminal Value$61.50

Fair Value per Share$87.40

Sensitivity Analysis

Fair value under different Cost of Equity (rows) and DPS Growth Rate (columns) assumptions.

Ke \ Growth	0.0%	0.1%	1.1%	2.1%	3.1%
7.8%	$115	$115	$120	$126	$131
8.8%	$97	$97	$101	$106	$110
9.8%	$84	$84	$87	$91	$95
10.8%	$74	$74	$77	$80	$84
11.8%	$66	$66	$69	$72	$75