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International Business Machines Corp. – Computer Systems Design Services
International Business Machines Corporation (IBM) is an American multinational technology corporation headquartered in Armonk, New York, with operations in over 171 countries. IBM produces and sells computer hardware, middleware and software, and provides hosting and consulting services in areas ranging from mainframe computers to nanotechnology. IBM is also a major research organization, holding the record for most annual U.S. patents generated by a business (as of 2020) for 28 consecutive years.
Analysis Results
Intrinsic Value $73.40
Latest Price $121.74
Relative Value 66% overvalued
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Cash Flow (Billions)
Analysis Parameters
New Ticker
Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -14.3%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 4.8%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -14.3%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 4.26 4.06
2023 3.65 3.32
2024 3.13 2.72
2025 2.68 2.23
2026 2.3 1.82
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 69.0 billion. This corresponds to a present value of 52.1 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 14.2 billion. Adding in the terminal value gives a total present value of 66.3 billion.

There are presently 903.0 million outstanding shares, so the intrinsic value per share is 73.4.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 29,540,000,000
Current Cash 14,471,000,000
Current Liabilities 33,619,000,000
Current Debt 6,787,000,000
Non-Cash Working Capital (NCWC) -11,763,000,000
Change in NCWC -4,430,000,000
EBIT 6,865,000,000
Tax Provision 124,000,000
Depreciation and Amortization 6,417,000,000
Capital Expenditure -2,768,000,000
Unlevered Free Cash Flow 5,908,010,750
Current Assets 39,165,000,000
Current Cash 13,812,000,000
Current Liabilities 39,869,000,000
Current Debt 7,183,000,000
Non-Cash Working Capital (NCWC) -7,333,000,000
Change in NCWC -7,981,000,000
EBIT 6,786,000,000
Tax Provision -864,000,000
Depreciation and Amortization 6,695,000,000
Capital Expenditure -3,230,000,000
Unlevered Free Cash Flow 2,270,000,000
Current Assets 38,420,000,000
Current Cash 8,868,000,000
Current Liabilities 37,701,000,000
Current Debt 8,797,000,000
Non-Cash Working Capital (NCWC) 648,000,000
Change in NCWC -8,480,000,000
EBIT 10,544,000,000
Tax Provision 731,000,000
Depreciation and Amortization 6,059,000,000
Capital Expenditure -2,286,000,000
Unlevered Free Cash Flow 5,078,893,970
Current Assets 49,145,000,000
Current Cash 11,997,000,000
Current Liabilities 38,227,000,000
Current Debt 10,207,000,000
Non-Cash Working Capital (NCWC) 9,128,000,000
Change in NCWC 2,349,000,000
EBIT 13,216,000,000
Tax Provision 2,619,000,000
Depreciation and Amortization 4,480,000,000
Capital Expenditure -3,964,000,000
Unlevered Free Cash Flow 13,029,002,468
Current Assets 49,735,000,000
Current Cash 12,580,000,000
Current Liabilities 37,363,000,000
Current Debt 6,987,000,000
Non-Cash Working Capital (NCWC) 6,779,000,000
Change in NCWC 178,000,000
EBIT 11,798,000,000
Tax Provision 5,642,000,000
Depreciation and Amortization 4,541,000,000
Capital Expenditure -3,773,000,000
Unlevered Free Cash Flow 6,904,512,676
Current Assets 43,889,000,000
Current Cash 8,527,000,000
Current Liabilities 36,274,000,000
Current Debt 7,513,000,000
Non-Cash Working Capital (NCWC) 6,601,000,000
Change in NCWC 100,000,000
EBIT 13,107,000,000
Tax Provision 449,000,000
Depreciation and Amortization 4,381,000,000
Capital Expenditure -4,150,000,000
Unlevered Free Cash Flow 12,960,782,760
Current Assets 42,504,000,000
Current Cash 8,194,000,000
Current Liabilities 34,270,000,000
Current Debt 6,461,000,000
Non-Cash Working Capital (NCWC) 6,501,000,000
Change in NCWC -576,000,000
EBIT 15,690,000,000
Tax Provision 2,581,000,000
Depreciation and Amortization 3,855,000,000
Capital Expenditure -4,151,000,000
Unlevered Free Cash Flow 12,278,435,845
Current Assets 49,422,000,000
Current Cash 8,476,000,000
Current Liabilities 39,600,000,000
Current Debt 5,731,000,000
Non-Cash Working Capital (NCWC) 7,077,000,000
Change in NCWC 84,000,000
EBIT 18,532,000,000
Tax Provision 4,234,000,000
Depreciation and Amortization 4,492,000,000
Capital Expenditure -3,740,000,000
Unlevered Free Cash Flow 15,442,223,845
Current Assets 51,351,000,000
Current Cash 11,066,000,000
Current Liabilities 40,154,000,000
Current Debt 6,862,000,000
Non-Cash Working Capital (NCWC) 6,993,000,000
Change in NCWC 3,133,000,000
EBIT 19,599,000,000
Tax Provision 3,041,000,000
Depreciation and Amortization 4,678,000,000
Capital Expenditure -4,140,000,000
Unlevered Free Cash Flow 20,217,474,571
Current Assets 49,433,000,000
Current Cash 11,129,000,000
Current Liabilities 43,625,000,000
Current Debt 9,181,000,000
Non-Cash Working Capital (NCWC) 3,860,000,000
Change in NCWC -1,486,000,000
EBIT 21,517,000,000
Tax Provision 5,298,000,000
Depreciation and Amortization 4,676,000,000
Capital Expenditure -4,082,000,000
Unlevered Free Cash Flow 15,419,892,196

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