IBM - Embedded Expectations Analysis - 2018 08 29
International Business Machines Corporation (IBM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 14.9x Uniform P/E, implying bearish expectations for the firm. Moreover, management has concerns about their differentiation strategy and their ability to create synergies from their investmentsSpecifically, management may be concerned about their ability to realize synergies from acquisitions and to leverage value from their R&D, specifically from their GBS investments. Additionally, they may be overstating the impact that seasonality had on their lower cash generation. Moreover, they may lack confidence in the sustainability of a large number of $100mn+ deals, as well as high banking volumes from IBM Z. Furthermore, they may be concerned about continuing declines in Technical Support Services revenue, as well as low backlog and revenue in GBS. Furthermore, they may lack confidence in their overarching differentiation strategy, structure, and business models, particularly within AMS. Finally, they may be concerned about their ability to expand services margins in H2 2018, and they may be exaggerating their operating leverage going forward
International Business Machines provides integrated solutions and products that utilize data, information technology, capability in industries and business processes. The company has five segments: Cloud and Cognitive Software, which provides a range of software offerings; Global Business Services, which provides consulting, systems integration, application management and business process outsourcing services; Global Technology Services, which provides project services, managed and outsourcing services, cloud-delivered services, and technical and IT support services; Systems, which provides technology and service; and Global Financing, which provides client financing, among others.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.