Common Stock Valuation Ratios (Price Multiples)
Valuation ratios measure the quantity of an asset or flaw (e.g., earnings) associated with ownership of a specified claim (e.g., a share of ownership of the enterprise).
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- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Aggregate Accruals
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Current Valuation Ratios
International Business Machines Corp., current price multiples
| International Business Machines Corp. | Accenture PLC | Adobe Inc. | Cadence Design Systems Inc. | CrowdStrike Holdings Inc. | Intuit Inc. | Microsoft Corp. | Oracle Corp. | Palantir Technologies Inc. | Palo Alto Networks Inc. | Salesforce Inc. | ServiceNow Inc. | Synopsys Inc. | Workday Inc. | Software & Services | Information Technology | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||
| Current share price (P) | |||||||||||||||||||
| No. shares of common stock outstanding | |||||||||||||||||||
| Growth rate (g) | |||||||||||||||||||
| Earnings per share (EPS) | |||||||||||||||||||
| Next year expected EPS | |||||||||||||||||||
| Operating profit per share | |||||||||||||||||||
| Sales per share | |||||||||||||||||||
| Book value per share (BVPS) | |||||||||||||||||||
| Valuation Ratios (Price Multiples) | |||||||||||||||||||
| Price to earnings (P/E) | |||||||||||||||||||
| Price to next year expected earnings | |||||||||||||||||||
| Price-earnings-growth (PEG) | |||||||||||||||||||
| Price to operating profit (P/OP) | |||||||||||||||||||
| Price to sales (P/S) | |||||||||||||||||||
| Price to book value (P/BV) | |||||||||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
If the company price multiple is lower then the price multiple of benchmark then company stock is relatively undervalued.
Otherwise, if the company price multiple is higher then the price multiple of benchmark then company stock is relatively overvalued.
Historical Valuation Ratios (Summary)
International Business Machines Corp., historical price multiples
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Price to earnings (P/E) | ||||||
| Price to operating profit (P/OP) | ||||||
| Price to sales (P/S) | ||||||
| Price to book value (P/BV) |
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).
- Price to Earnings (P/E) Ratio
- The P/E ratio exhibits notable volatility across the observed years. It remained relatively stable around 19.3-19.4 in 2020 and 2021, before experiencing a sharp increase to 71.56 in 2022. Subsequently, it declined to 22.5 in 2023, followed by another significant rise to 39.68 in 2024. This pattern suggests fluctuating investor expectations regarding earnings growth or changes in earnings performance.
- Price to Operating Profit (P/OP) Ratio
- The P/OP ratio displayed moderate variation over the five-year period. Starting at 15.9 in 2020, it showed a slight increase to 16.23 in 2021, then dipped to 14.35 in 2022. In 2023, it increased again to 17.99, and reached its highest point of 25.48 in 2024. The rising trend in the latter years indicates growing market valuation relative to operating profits.
- Price to Sales (P/S) Ratio
- The P/S ratio demonstrated consistent upward movement over the period analyzed. Beginning at 1.47 in 2020, it rose steadily to 1.94 in 2021 and 2022, then accelerated its growth to 2.73 in 2023 and further to 3.81 in 2024. This steady increase signals enhanced investor willingness to pay more for sales, reflecting improved sales prospects or market optimism.
- Price to Book Value (P/BV) Ratio
- The P/BV ratio also showed a rising trend over the timeframe. It increased from 5.24 in 2020 to 5.9 in 2021, slightly decreased to 5.34 in 2022, then rose sharply to 7.49 in 2023 and further to 8.75 in 2024. This pattern indicates an overall increase in market valuation relative to the company’s book value, suggesting enhanced perceived asset value or growth expectations.
Price to Earnings (P/E)
International Business Machines Corp., historical P/E 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 | ||||||
| Selected Financial Data (US$) | ||||||
| Net income attributable to IBM (in millions) | ||||||
| Earnings per share (EPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/E ratio4 | ||||||
| Benchmarks | ||||||
| P/E Ratio, Competitors5 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| P/E Ratio, Sector | ||||||
| Software & Services | ||||||
| P/E Ratio, Industry | ||||||
| Information Technology | ||||||
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.
2 2024 Calculation
EPS = Net income attributable to IBM ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of International Business Machines Corp. Annual Report.
4 2024 Calculation
P/E ratio = Share price ÷ EPS
= ÷ =
5 Click competitor name to see calculations.
- Share Price Trend
- The share price demonstrates a consistent upward trajectory over the five-year period. Starting at $120.71 in 2020, it increases slightly to $123.92 in 2021, followed by a moderate rise to $129.3 in 2022. A significant jump is observed in 2023, where the price reaches $184.13, and this upward momentum accelerates further in 2024, culminating at $257.75.
- Earnings Per Share (EPS) Pattern
- EPS shows relative stability in the initial two years, with values of $6.26 in 2020 and $6.39 in 2021. In 2022, a sharp decline to $1.81 is evident, indicating a substantial earnings drop during that period. This is followed by a strong rebound in 2023, with EPS rising to $8.18, before slightly decreasing in 2024 to $6.5.
- Price-to-Earnings (P/E) Ratio Dynamics
- The P/E ratio remains relatively stable and moderate at 19.3 and 19.4 in 2020 and 2021, respectively. In 2022, the ratio spikes dramatically to 71.56, likely reflecting the significant EPS decline and the relative share price level. Subsequently, the ratio normalizes to 22.5 in 2023, coinciding with the EPS recovery, and then increases again to 39.68 in 2024, indicating a higher valuation despite the moderate decline in EPS from the previous year.
- Overall Insights
- The data suggests that the company experienced a notable earnings disruption in 2022, severely impacting EPS and inflating the P/E ratio. Despite this, the share price showed resilience, continuing an upward trend throughout the period. The recovery in EPS in 2023 aligns with a normalization of the P/E ratio, but valuation metrics in 2024 indicate increased investor expectations or confidence, given the elevated P/E despite lower EPS compared to the previous year. This pattern reflects investor optimism and a potentially strong market position or future growth prospects, notwithstanding fluctuations in earnings performance.
Price to Operating Profit (P/OP)
International Business Machines Corp., historical P/OP calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Operating income (in millions) | ||||||
| Operating profit per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/OP ratio4 | ||||||
| Benchmarks | ||||||
| P/OP Ratio, Competitors5 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| P/OP Ratio, Sector | ||||||
| Software & Services | ||||||
| P/OP Ratio, Industry | ||||||
| Information Technology | ||||||
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.
2 2024 Calculation
Operating profit per share = Operating income ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of International Business Machines Corp. Annual Report.
4 2024 Calculation
P/OP ratio = Share price ÷ Operating profit per share
= ÷ =
5 Click competitor name to see calculations.
The analysis of the given financial data reveals several notable trends over the five-year period from 2020 to 2024.
- Share Price Trend
- The share price exhibited a consistent upward trajectory throughout the period. Starting at $120.71 in 2020, it increased marginally to $123.92 in 2021 and further to $129.30 in 2022. A more significant increase occurred in 2023, with the share price rising to $184.13, followed by an even steeper rise to $257.75 in 2024. This pattern suggests heightened investor confidence or favorable market conditions in the later years.
- Operating Profit Per Share (OPPS)
- Operating profit per share showed a generally positive trend, increasing from $7.59 in 2020 to $7.63 in 2021, indicating stability. A more pronounced growth was observed in 2022 at $9.01 and continued into 2023 at $10.23. However, there was a slight decrease to $10.12 in 2024, though the figure remained significantly higher than in the initial years. This trend suggests improvements in operational efficiency or profitability, with a minor setback in the last year.
- Price to Operating Profit Ratio (P/OP)
- The P/OP ratio fluctuated over the period, starting at 15.9 in 2020 and increasing slightly to 16.23 in 2021. It then decreased to 14.35 in 2022, implying that the share price was relatively lower compared to operating profit at that time. However, this ratio rose sharply in the following years to 17.99 in 2023 and peaked at 25.48 in 2024. This sharp increase indicates that the market price grew disproportionately compared to operating profit per share in the last two years, which may reflect higher market expectations or a premium valuation.
In summary, the data depicts strong growth in market valuation alongside rising operating profits, especially notable in the last two years. The significant increase in the P/OP ratio toward the end of the period suggests that investor optimism or market valuation multiples expanded considerably, potentially signaling expectations of future growth or other qualitative factors impacting the stock price beyond operating profit metrics alone.
Price to Sales (P/S)
International Business Machines Corp., historical P/S calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Revenue (in millions) | ||||||
| Sales per share2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/S ratio4 | ||||||
| Benchmarks | ||||||
| P/S Ratio, Competitors5 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| P/S Ratio, Sector | ||||||
| Software & Services | ||||||
| P/S Ratio, Industry | ||||||
| Information Technology | ||||||
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.
2 2024 Calculation
Sales per share = Revenue ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of International Business Machines Corp. Annual Report.
4 2024 Calculation
P/S ratio = Share price ÷ Sales per share
= ÷ =
5 Click competitor name to see calculations.
The analysis of the annual financial data reveals several notable trends over the five-year period.
- Share Price
- The share price demonstrated a consistent upward trajectory, increasing from $120.71 in 2020 to $257.75 in 2024. This represents more than a doubling in value over the observed period, with particularly significant growth observed between 2022 and 2024.
- Sales per Share
- Sales per share exhibited a decline from $82.39 in 2020 to $63.77 in 2021, followed by a modest recovery to $67.68 by 2024. Despite this recovery, sales per share in 2024 remained below the 2020 level, indicating a relatively flat sales performance when adjusted on a per-share basis over the entire timeframe.
- Price-to-Sales Ratio (P/S)
- The P/S ratio showed a steady increase, rising from 1.47 in 2020 to a notably high 3.81 in 2024. This trend underscores growing investor willingness to pay a premium relative to sales, likely driven by expectations of improved future profitability or strategic positioning, despite the relatively stable sales per share.
Overall, the data suggests that market valuation has significantly outpaced sales growth, as evidenced by the large increase in the share price and P/S ratio contrasting with the relatively stagnant sales per share. This divergence may reflect positive market sentiment, investment in growth initiatives, or other qualitative factors influencing investor perceptions.
Price to Book Value (P/BV)
International Business Machines Corp., historical P/BV calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | ||||||
| Selected Financial Data (US$) | ||||||
| Total IBM stockholders’ equity (in millions) | ||||||
| Book value per share (BVPS)2 | ||||||
| Share price1, 3 | ||||||
| Valuation Ratio | ||||||
| P/BV ratio4 | ||||||
| Benchmarks | ||||||
| P/BV Ratio, Competitors5 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| P/BV Ratio, Sector | ||||||
| Software & Services | ||||||
| P/BV Ratio, Industry | ||||||
| Information Technology | ||||||
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.
2 2024 Calculation
BVPS = Total IBM stockholders’ equity ÷ No. shares of common stock outstanding
= ÷ =
3 Closing price as at the filing date of International Business Machines Corp. Annual Report.
4 2024 Calculation
P/BV ratio = Share price ÷ BVPS
= ÷ =
5 Click competitor name to see calculations.
- Share Price
- The share price exhibited a consistent upward trend from 2020 to 2024. Starting at $120.71 in 2020, it increased modestly to $123.92 in 2021 and $129.30 in 2022. A more substantial rise occurred in 2023, with the price reaching $184.13, followed by a significant jump to $257.75 in 2024, indicating growing investor confidence or improved market valuation.
- Book Value Per Share (BVPS)
- Book value per share showed some fluctuations but generally trended upward over the five-year period. It decreased from $23.05 in 2020 to $21.02 in 2021, suggesting a possible contraction in net asset value per share. However, it recovered and increased to $24.19 in 2022, followed by a moderate rise to $24.58 in 2023 and a more pronounced increase to $29.45 in 2024, indicating strengthening net asset backing per share.
- Price-to-Book Value Ratio (P/BV)
- The P/BV ratio fluctuated but showed a general increasing trend. It started at 5.24 in 2020, rose to 5.90 in 2021, then declined to 5.34 in 2022. Afterward, it increased significantly to 7.49 in 2023 and further to 8.75 in 2024. This suggests that the market price is growing at a faster pace relative to the book value, reflecting heightened market expectations or premium valuation relative to the underlying book assets.