IBM
International Business Machines Corporation
$216.22
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 0.7% above fair value
You pay
$216.22
Bear
$171.76
Fair
$214.70
Bull
$257.64
Bear
$171.76
-20.6%
$12.41 × 12x P/E
Fair
$214.70
-0.7%
$12.41 × 15x P/E
Bull
$257.64
+19.2%
$12.41 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
17.4x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $267.80 from 51 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $214.70 per share.
Warnings
Dividend-based valuation: $97.25 (below our primary estimate by 48%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $267.80 (from 51 analysts). Our estimate is 31% 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