Tuesday, April 16, 2024
IBM - a stock worth keeping an eye on.

IBM – a stock worth keeping an eye on.

Let’s talk about the popular International Business Machines Corporation (NYSE:IBM)

The company’s shares saw a decent share price growth in the teens level on the NYSE over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on International Business Machines’s outlook and valuation to see if the opportunity still exists.

What’s The Opportunity In International Business Machines?

Good news, investors! International Business Machines is still a bargain right now. According to my valuation, the intrinsic value for the stock is $180.89, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. Another thing to keep in mind is that International Business Machines’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What kind of growth will International Business Machines generate?

earnings-and-revenue-growth
NYSE:IBM Earnings and Revenue Growth July 26th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. International Business Machines’ earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since IBM is currently undervalued, it may be a great time to increase your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on IBM for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy IBM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

If you’d like to know more about International Business Machines as a business, it’s important to be aware of any risks it’s facing. At Simply Wall St, we found 4 warning signs for International Business Machines and we think they deserve your attention.

If you are no longer interested in International Business Machines, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we’re helping make it simple.

Find out whether International Business Machines is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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About Eamon Connor

Meet Eamon Connor, a master of all things business, entrepreneurship, finance, and investing! With a passion for leadership and management, he shares invaluable insights on how to excel in the online business space, make money online, and stand out in the world of marketing and advertising. With Eamon's guidance, you'll be well on your way to startup success!

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