MeritValue

INTERNATIONAL BUSINESS MACHINES CORP

IBMdata completeness 100%19 fiscal years on file
The thesis, from the filings

INTERNATIONAL BUSINESS MACHINES CORP earns about 11% on invested capital, barely covering its ~9% cost of capital, but has diluted owners by 5% over 5 years — worth asking whether the growth reaches owners. The estimate methods put fair value between $65.79 and $199.76 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$57.4B1$60.5B2$61.9B3$62.8B3$67.5B3
Net income$5.74B4$1.64B5$7.5B6$6.02B6$10.6B6
Operating cash flow$12.8B7$10.4B8$13.9B9$13.4B9$13.2B9
Capital expenditure$2.06B10$1.35B11$1.25B12$1.05B12$1.09B12
Free cash flow (derived)$10.7B7$9.09B8$12.7B9$12.4B9$12.1B9
Total debt$51.7B13$50.9B14$56.5B15$55B16$61.3B16
Cash & equivalents$6.65B17$7.89B18$13.1B19$13.9B20$13.6B20
Diluted shares904.6M912.3M922.1M937.2M948.7M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$344.14
your share of equity
Profit it earned you last year
$111.66
Free cash flow it threw off
$127.57
Debt you’d be carrying
$645.74

10 shares is a claim on $344.14 of net worth that earned you $111.66 and generated $127.57 of cash last year, against $645.74 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
11% avg · 5y
FY21 9%FY22 4%FY23 13%FY24 11%FY25 15%

It earned about 11% on invested capital against a ~9% cost of capital — roughly what it costs to fund the business, so the numbers show no clear edge.

seeing a moat in the numbers →
Management signal · capital allocation
+5% shares · 5y

Share count is up 5% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has risen 18% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $65.79 and $199.76 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$199.76
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth4.9%
  • fcfBase$12.4B
DCF · Growth Exit 5Y
$180.84
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth4.9%
  • fcfBase$12.4B
Earnings Power Value
$65.79
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$6.02B
  • growthAssumed0.0%
Graham Number
$93
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years4.9%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $180.84
The three cases
Bear0.0%$136.46
Base4.9%$180.84
Bull9.9%$234.76

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 4.9%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000051143-24-000012 (Revenues)
  2. 10-K · period ending 2022-12-31 · accession 0000051143-25-000015 (Revenues)
  3. 10-K · period ending 2023-12-31 · accession 0000051143-26-000010 (Revenues)
  4. 10-K · period ending 2021-12-31 · accession 0000051143-24-000012 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000051143-25-000015 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0000051143-26-000010 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000051143-24-000012 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000051143-25-000015 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0000051143-26-000010 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000051143-24-000012 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0000051143-25-000015 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0000051143-26-000010 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0001558370-23-002376 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-12-31 · accession 0000051143-24-000012 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-12-31 · accession 0000051143-25-000015 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-12-31 · accession 0000051143-26-000010 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-12-31 · accession 0001558370-23-002376 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0000051143-24-000012 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0000051143-25-000015 (CashAndCashEquivalentsAtCarryingValue)
  20. 10-K · period ending 2024-12-31 · accession 0000051143-26-000010 (CashAndCashEquivalentsAtCarryingValue)