Now let’s look at the well-established International Business Machines Corporation (NYSE:IBM). The company’s stock has received a lot of attention from a substantial increase in the NYSE price over the past few months. As a large-cap stock with high analyst coverage, you can assume any recent changes in the company’s outlook are already priced into the stock. However, is it still possible to sell the stock at a relatively cheap price? Let’s examine International Business Machines’ valuation and outlook in more detail to see if there is still a bargain opportunity.
Check out our latest analysis for International Business Machines
Are international business machines still cheap?
The stock seems fairly valued at the moment according to my valuation model. It is trading about 15% below my intrinsic value, which means that if you buy International Business Machines today, you will pay a reasonable price for it. And if you believe that the true value of the company is $171.62, then there is not much room for the share price to rise above what it is currently trading for. In addition, the share price of International Business Machines will be more stable over time (relation to the market), as shown by its low beta.
What does the future of International Business Machines look like?
Investors looking for growth in their portfolio may want to consider a company’s prospects before buying its shares. Although value investors will argue that it is intrinsic value relative to price that is most important, a more compelling investment thesis may be high growth potential at an affordable price. International Business Machines’ earnings in the next few years are expected to double, indicating a promising future ahead. This should lead to stronger cash flow, feeding into a higher share value.
What Does It Mean For You
Are you a shareholder? Optimistic growth in IBM’s future appears to be factored into the current share price, with shares trading around their fair value. However, there are other important factors that we are not considering right now, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Do you have enough conviction to buy when the price fluctuates below the true value?
Are you a potential investor? If you are keeping an eye on IBM, now may not be the best time to buy, as it is trading at a fair value. However, the optimistic outlook is encouraging for the company, which means that it is necessary to check other factors such as the strength of its balance sheet, in order to take advantage of the next price reduction.
If you want to dive deeper into International Business Machines, you will also see what risks it is currently facing. For example, International Business Machines has 5 warning signs (and 1 that makes us uncomfortable) we think you should know.
If you are no longer interested in International Business Machines, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased approach and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.