The Simple Genius of IBM

E = Equity to Debt Ratio Is Normal  

The debt-to-equity ratio for IBM is higher than the industry average of 0.70. The balance sheet is in negative territory. However, operating cash flow is phenomenal at $19.60 billion. Levered free cash flow is also very impressive at $15.72 billion.

Debt-To-Equity

Cash

Long-Term Debt

IBM

1.75

$11.13 Billion

$33.27 Billion

HPQ

1.21

$12.59 Billion

$21.70 Billion

DELL

0.85

$12.78 Billion

$9.08 Billion

 

T = Technicals on the Stock Chart Are Strong  

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IBM has outperformed Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL) over three-year and one-year timeframes. That trend has changed as of late, but Dell and Hewlett-Packard are going to see bigger moves. IBM is the large, steady ship in the sea. As far as dividend yield, Dell yields 2.30 percent, Hewlett-Packard yields 2.70 percent and IBM yields 1.70 percent.

1 Month

Year-To-Date

1 Year

3 Year

IBM

-1.28%

5.63%

2.43%

59.11%

HPQ

16.36%

38.74%

-24.68%

-61.08%

DELL

5.77%

37.28%

-20.54%

5.13%

 

At $200.83, IBM is currently trading above all its averages.

50-Day   SMA

197.57

100-Day   SMA

196.50

200-Day   SMA

196.58

 

E = Earnings Have Been Consistent              

It’s not often that you find a company with consistent earnings growth on an annual basis for five consecutive years. Revenue hasn’t been as consistent, but it’s still impressive in a macro sense.

2008

2009

2010

2011

2012

Revenue   ($)in   billions

103.63

95.76

99.87

106.92

104.51

Diluted   EPS ($)

8.89

10.01

11.52

13.06

14.37

 

When we look at the last quarter on a year-over-year basis, we see a slight decline in revenue and a moderate increase in earnings.

12/2011

3/2011

6/2012

9/2012

12/2012

Revenue   ($)in   billions

29.49

24.67

25.78

24.75

29.30

Diluted   EPS ($)

4.56

2.61

3.34

3.33

5.09

 

Now let’s take a look at the next page for the Conclusion. Is this stock an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY?