Comparing IBM’s and Peers’ Valuation



Peer comparison based on market capitalization

On June 1, IBM’s (IBM) market capitalization was $129.7 billion, while peers Microsoft (MSFT), Oracle (ORCL), and Accenture (ACN) had market caps of $759.4 billion, $190.7 billion, and $100.2 billion, respectively, as shown in the graph below.

IBM’s valuation metrics

On June 1, IBM’s forward EV[1.enterprise value]-to-EBITDA multiple was ~8.7x, while Microsoft, Oracle, and Accenture had forward EV-to-EBITDA multiples of ~15.7x, ~9.6x, and ~14.6x, respectively. IBM was trading at a forward PE multiple of ~11.9x, whereas Microsoft’s, Oracle’s, and Accenture’s were ~27.4x, ~18.8x, and ~26.4x, respectively.

Bollinger Band

IBM stock closed at $141.95 on June 1, close to its lower Bollinger Band level of $141. This value indicates that the stock is oversold, and investors may see it as a signal to “buy.”

Short interest ratio and historic returns

On June 1, IBM stock’s short interest as a percentage of its shares outstanding (or short interest ratio) was ~2.7%. Generally, a short interest ratio greater than 40% may indicate an impending stock price fall. IBM stock has fallen 6.6% in the last year, 0.35% in the last month, and 1.7% in the last five days.

More From Market Realist