IBM
International Business Machines Corporation
$253.44
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 51.3% above fair value
You pay
$253.44
Bear
$134.04
Fair
$167.55
Bull
$201.06
Bear
$134.04
-47.1%
$11.17 × 12x P/E
Fair
$167.55
-33.9%
$11.17 × 15x P/E
Bull
$201.06
-20.7%
$11.17 × 18x P/E
Adjust Assumptions
15.0x
11.17$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
22.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (52 analysts)
$271.07
Divergence from AlphaVal
38%
Summary
Applying a 15x P/E to adjusted EPS of $11.17, the base-case value is $167.55 per share. DDM cross-check: $97.39.
Warnings
Dividend-based valuation: $97.39 (below our primary estimate by 42%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $271.07 (from 52 analysts). Our estimate is 38% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples