Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
International Business Machines Corp., FCFE calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of the financial data over the five-year period reveals several notable trends and fluctuations in the cash flow metrics.
- Net Cash Provided by Operating Activities
- There is a general downward trend from 2020 through 2022, with values declining from approximately $18.2 billion in 2020 to about $10.4 billion in 2022. However, this is followed by a recovery in 2023, where cash provided by operating activities increased to approximately $13.9 billion, before a slight decrease to $13.4 billion in 2024. This pattern suggests some volatility or operational challenges during the earlier years, followed by a partial rebound.
- Free Cash Flow to Equity (FCFE)
- The FCFE figures exhibit greater volatility compared to operating cash flows. Starting at $11.4 billion in 2020, FCFE sharply declined to $2.3 billion in 2021, indicating a significant reduction in cash available to equity holders. It then more than quadrupled in 2022 to nearly $9.8 billion, followed by a peak in 2023 at $16.9 billion. In 2024, FCFE decreased again to approximately $11.4 billion, matching the 2020 level. These fluctuations may reflect changes in investment activities, financing decisions, or other cash outflows and inflows impacting equity holders across these years.
Overall, the operating cash flows show a pattern of initial decline with some recovery, whereas free cash flow to equity demonstrates higher volatility, with wide swings that may suggest changing capital expenditure or financing policies. The data highlights variability in the company's cash generation and distribution capacity to shareholders over the analyzed period.
Price to FCFE Ratio, Current
International Business Machines Corp., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 929,396,575 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in millions) | 11,437) |
| FCFE per share | 12.31 |
| Current share price (P) | 283.59 |
| Valuation Ratio | |
| P/FCFE | 23.05 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Accenture PLC | 18.55 |
| Adobe Inc. | 15.62 |
| Cadence Design Systems Inc. | 29.77 |
| CrowdStrike Holdings Inc. | 111.67 |
| Fair Isaac Corp. | 39.55 |
| Intuit Inc. | 45.90 |
| Microsoft Corp. | 50.12 |
| Oracle Corp. | 124.49 |
| Palantir Technologies Inc. | 293.84 |
| Palo Alto Networks Inc. | 60.45 |
| Salesforce Inc. | 22.78 |
| ServiceNow Inc. | 57.58 |
| Synopsys Inc. | 71.78 |
| Workday Inc. | 27.25 |
| P/FCFE, Sector | |
| Software & Services | 46.21 |
| P/FCFE, Industry | |
| Information Technology | 46.41 |
Based on: 10-K (reporting date: 2024-12-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
International Business Machines Corp., historical P/FCFE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 927,264,332 | 916,744,848 | 907,105,611 | 899,309,986 | 893,594,090 | |
| Selected Financial Data (US$) | ||||||
| Free cash flow to equity (FCFE) (in millions)2 | 11,437) | 16,939) | 9,795) | 2,300) | 11,441) | |
| FCFE per share3 | 12.33 | 18.48 | 10.80 | 2.56 | 12.80 | |
| Share price1, 4 | 257.75 | 184.13 | 129.30 | 123.92 | 120.71 | |
| Valuation Ratio | ||||||
| P/FCFE5 | 20.90 | 9.97 | 11.97 | 48.45 | 9.43 | |
| Benchmarks | ||||||
| P/FCFE, Competitors6 | ||||||
| Accenture PLC | 23.91 | 21.01 | 17.87 | 25.76 | 19.01 | |
| Adobe Inc. | 18.02 | 41.83 | 21.32 | 34.26 | 41.36 | |
| Cadence Design Systems Inc. | 24.08 | 71.40 | 33.41 | 36.31 | 45.86 | |
| CrowdStrike Holdings Inc. | 85.82 | 42.65 | 99.63 | 41.38 | 880.68 | |
| Fair Isaac Corp. | 53.56 | 49.48 | 10.12 | 12.69 | 38.46 | |
| Intuit Inc. | 38.43 | 38.74 | 13.86 | 86.74 | 17.36 | |
| Microsoft Corp. | 42.11 | 43.32 | 36.73 | 42.54 | 42.74 | |
| Oracle Corp. | 48.38 | 15.47 | — | 8.36 | 6.27 | |
| Palantir Technologies Inc. | 256.11 | 74.28 | 96.89 | 198.12 | — | |
| Palo Alto Networks Inc. | 52.90 | 79.75 | 29.54 | 32.91 | 8.11 | |
| Salesforce Inc. | 38.33 | 31.06 | 16.56 | 49.52 | 50.40 | |
| ServiceNow Inc. | 61.82 | 58.19 | 44.44 | 64.54 | 49.83 | |
| Synopsys Inc. | 63.08 | 57.04 | 33.41 | 40.55 | 45.07 | |
| Workday Inc. | 36.59 | 19.79 | 49.17 | 40.57 | 74.21 | |
| P/FCFE, Sector | ||||||
| Software & Services | 39.97 | 32.86 | 30.85 | 33.71 | 26.75 | |
| P/FCFE, Industry | ||||||
| Information Technology | 36.66 | 33.16 | 26.84 | 27.24 | 23.37 | |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Data adjusted for splits and stock dividends.
3 2024 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 11,437,000,000 ÷ 927,264,332 = 12.33
4 Closing price as at the filing date of International Business Machines Corp. Annual Report.
5 2024 Calculation
P/FCFE = Share price ÷ FCFE per share
= 257.75 ÷ 12.33 = 20.90
6 Click competitor name to see calculations.
- Share Price
- The share price exhibited a consistent upward trend over the five-year period. Starting at $120.71 in 2020, it increased slightly to $123.92 in 2021, followed by a moderate rise to $129.30 in 2022. From 2022 to 2024, the share price accelerated its growth significantly, reaching $184.13 in 2023 and 257.75 by the end of 2024. This progression indicates a strong positive market sentiment and increasing investor confidence over the analyzed timeframe.
- Free Cash Flow to Equity (FCFE) per Share
- FCFE per share displayed fluctuating values rather than a steady trend. It started relatively high at $12.80 in 2020, dropped sharply to $2.56 in 2021, suggesting a decline in cash available to equity holders that year. FCFE then rebounded to $10.80 in 2022 and reached a peak of $18.48 in 2023, indicating a recovery and substantial improvement in cash flow generation. However, it decreased again to $12.33 in 2024, signaling some variability in cash flow performance toward the end of the period.
- Price to FCFE (P/FCFE) Ratio
- The P/FCFE ratio displayed considerable volatility during the period. It was relatively low at 9.43 in 2020, then spiked dramatically to 48.45 in 2021, likely reflecting the sharp drop in FCFE per share that year, which inflated the valuation multiple. The ratio normalized to 11.97 in 2022 and further declined to 9.97 in 2023, suggesting alignment between price and free cash flow during these years. However, it increased again to 20.90 in 2024 despite the decrease in FCFE, likely attributing to the pronounced rise in share price. This pattern implies changing perceptions of value and/or shifts in the company's expected future cash flows.
- Overall Insights
- The data reveals an evolving financial performance with notable fluctuations in cash flow generation contrasted by a steady and sharp appreciation in market valuation. The divergence between share price growth and FCFE trends in some years results in fluctuating valuation multiples. The sharp increase in share price, especially from 2022 onward, may suggest heightened investor optimism or expectations of future growth, even as the FCFE per share did not consistently increase. This could indicate either market anticipation of improved future cash flows or other qualitative factors influencing valuation beyond free cash flow metrics.