IBM Common Stock (IBM) receives a strong valuation ranking of 84 from InvestorsObserver’s data analysis. The proprietary ranking system focuses on the underlying health of a company through analysis of its stock price, earnings, and growth rate. IBM has a better value than 84% of stocks based on these valuation analytics. Investors primarily focused on buy-and-hold strategies will find the valuation ranking relevant to their goals when making investment decisions.
IBM‘s trailing-12-month price to Earnings (PE) ratio of 19 puts it around the historical average of roughly 15. IBM is a average value at its current trading price as investors are paying around what its worth in relation to the company’s earnings. IBM‘s trailing-12-month earnings per share (EPS) of 6.23 does justify what it is currently trading at in the market. Trailing PE ratios, however, do not factor in a company’s projected growth rate, resulting in some firms having high PE ratios due to high growth potentially enticing investors even if current earnings are low.
IBM has a 12 month forward PE to Growth (PEG) ratio of 1.35. Markets are undervaluing IBM in relation to its projected growth as its PEG ratio is currently below the fair market value of 1. 6.23000001’s PEG comes from its forward price to earnings ratio being divided by its growth rate. PEG ratios are one of the most used valuation metrics due to its incorporation of more company fundamentals metrics and a focus on the firm’s future rather than its past.
IBM‘ has a weak valuation at its current share price on account of a overvalued PEG ratio despite strong growth. IBM‘s PE and PEG are worse than the market average leading to a below average valuation score.