Deciphering IBM’s Financial Fortitude: A Value Investor’s Perspective (Piotroski F-Score 7)
In this analysis, we go into the financial details of IBM, we’ll use the Piotroski F-Score for the fiscal year 2023 and looking into profitability, liquidy and operational numbers.
International Business Machines, known as IBM. With a storied history spanning over a century, IBM has continuously evolved to navigate the winds of change in an ever-evolving industry. From pioneering breakthroughs in computing to spearheading revolutions in artificial intelligence and cloud computing, IBM’s journey is emblematic of resilience, innovation, and adaptability.
What is the the business of IBM?
IBM’s current strategy focuses on hybrid cloud and artificial intelligence (AI). The company aims to leverage its acquisition of Red Hat to drive growth in the hybrid cloud market, while also advancing AI capabilities with Watson and other technologies. This strategy is designed to help clients modernize their IT infrastructures and applications, enabling digital transformation across industries. Read more about International Business Machines here:
Exploring the Piotroski F-Score
At the heart of our analysis lies the renowned Piotroski F-Score, a nine-point scoring system devised by accounting professor Joseph Piotroski. This rigorous framework evaluates various financial metrics to gauge the overall health and vitality of a company. Let us check IBM’s financial metrics for 2023. Read more about here:
Short Analysis
We’re running International Business Machines (IBM) against the 9-criteria scoring system to evaluate the performance and stability of a company’s dividend policy.
Let’s take a closer look and break down these financial terms — we’re going to explore the key areas of Profitability, Liquidity, and Operating Performance specifically for International Business Machines (IBM), to give you a clearer picture of what they mean for the company’s health.
Profitability
A substantial surge in net income, catapulting from $1.64 billion to $7.5 billion, underscores IBM’s adeptness at generating sustainable profits amidst a competitive landscape.
Moreover, the augmentation of cash flow from operations to $13.93 billion signifies robust operational health, instilling confidence in IBM’s ability to navigate turbulent waters with aplomb.
Liquidity
While profitability paints a rosy picture, the liquidity landscape unveils nuances that warrant careful consideration. The modest uptick in leverage and the issuance of additional shares in 2023 pose challenges, dampening the otherwise buoyant narrative.
However, the commendable enhancement in the current ratio to 0.9644 signals a strengthened liquidity position, bolstering IBM’s resilience against unforeseen contingencies.
Operational
Venturing into the operational domain, IBM’s trajectory is marked by commendable strides in efficiency and effectiveness. The augmentation of gross margin to 0.5545 reflects a concerted focus on cost management and operational optimization, fortifying IBM’s competitive moat in a cutthroat industry.
Furthermore, the incremental improvement in asset turnover underscores IBM’s prowess in maximizing returns from its asset base, propelling the company towards sustainable growth.
Competitors
Here is the list of the main 5 competitors of International Business Machines (IBM):
- Microsoft (MSFT): Microsoft is a competitor primarily in cloud computing services (Azure) and AI solutions, challenging IBM’s Cloud and Watson products.
- Amazon (AMZN): Amazon, through its AWS cloud computing division, competes with IBM in the cloud services market, offering a wide range of infrastructure and platform services.
- Alphabet (GOOGL): Google, with its Google Cloud Platform (GCP), offers cloud computing services and AI solutions that pose competition to IBM Cloud and Watson.
- Oracle (ORCL): Oracle competes with IBM in the cloud services and enterprise software market, particularly with its Database services and cloud infrastructure.
- SAP (SAP): SAP is a competitor in the enterprise resource planning (ERP) software market, challenging IBM’s software solutions for businesses.
Conclusion
Looking at IBM’s financial health through the Piotroski F-Score of 7, we’ve seen a story of growth and smart money management. But it’s not just about IBM — it’s also about their competition. Companies like Microsoft, Amazon, Google, Oracle, and SAP are all in the mix, offering similar tech and business solutions.
Despite this tough competition, IBM’s focus on areas like AI and cloud computing, combined with their track record of making money, makes them a solid choice for investors who want a mix of stability and innovation. So, while the numbers tell us a lot, it’s also about understanding the bigger picture — a story of a company that keeps moving forward, no matter what.
What is about you?
What is your opinion on IBM? Are you invested or you prefer one of the competitors? Are there better alternatives? Did you miss anything in the article? Let me know in the comments.
In addition, let me know what stocks you are interested in. Maybe I can consider it for my next analyses
Sincerely Viktor!!!
Disclaimer: The opinions expressed in this article are solely those of the author and do not constitute investment advice. Investors should conduct their own research and consult with financial advisors before making investment decisions.
