IBM
International Business Machines Corporation
Technology · Information Technology Services · United States · Stock
Score Breakdown
Scored for Aggressive Growth profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Strong growth scores were supported by a 75.9% surge in net income and 7.6% revenue growth in FY2025, contributing meaningfully to the composite score.
- Solid profitability metrics — 15.7% net margin, 15.3% operating margin, and 7.0% return on assets — added further support to the overall rating.
- The score is tempered by moderate financial leverage (debt-to-equity of 1.68), a high dividend payout ratio of 59.0%, and the absence of any macro theme assignment, which contributes zero points to the theme component.
Why Not Higher
- IBM's debt-to-equity ratio of 1.68 and a payout ratio of 59.0% limit the financial health and dividend scores, preventing a higher composite result.
- IBM is not currently assigned to any of the 24 tracked macro themes, meaning the theme factor contributes zero points to the total score.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $62,753,000,000 to FY2025's $67,535,000,000, a gain of +7.6%. Net income surged from FY2024's $6,023,000,000 to FY2025's $10,593,000,000 (+75.9%), while diluted EPS rose from FY2024's $6.43 to FY2025's $11.17 (+73.7%).
The model rewarded the combination of steady top-line expansion and a dramatic acceleration in bottom-line profitability, with the near-doubling of net income and EPS driving a high but not perfect growth score.
In FY2025, IBM posted a net margin of 15.7%, an operating margin of 15.3%, and a return on assets of 7.0%.
These figures indicate that IBM converts a meaningful share of revenue into profit and generates a solid return on its asset base, supporting a high but not maximum profitability score under the model.
In FY2025, IBM carried a debt-to-equity ratio of 1.68 and an interest coverage ratio of 5.3, against a total asset base of $151,880,000,000.
The model reflects a moderate financial health score: interest coverage of 5.3x suggests IBM can service its debt obligations, but a debt-to-equity ratio of 1.68 indicates meaningful leverage, which tempers the overall score.
Over the last four reported quarters, revenue moved from $16,977,000,000 in 2025Q2 to $16,331,000,000 in 2025Q3, then surged to $19,686,000,000 in 2025Q4 before declining to $15,917,000,000 in 2026Q1. Operating income followed a similar pattern: $2,597,000,000 in 2025Q2, $2,430,000,000 in 2025Q3, $4,143,000,000 in 2025Q4, and $1,387,000,000 in 2026Q1.
The model appears to reward the strong peak performance visible in 2025Q4 alongside the generally elevated revenue and income levels across the trailing four quarters, even though the most recent quarter, 2026Q1, shows a notable sequential pullback.
IBM's dividends per share have risen incrementally from $6.59 in FY2022 to $6.63 in FY2023, $6.67 in FY2024, and $6.71 in FY2025, while the FY2025 dividend payout ratio stood at 59.0%.
The model recognizes IBM's consistent, multi-year dividend growth streak, but the relatively high payout ratio of 59.0% in FY2025 and the modest pace of per-share increases likely limit the score to a mid-range result rather than a top mark.
IBM is not currently assigned to any of the 24 tracked macro themes in the model.
Because no macro theme assignment is in place, the theme component contributes no points to the overall score under the model's current methodology; this reflects the model's classification status and is not a characterization of the company's business.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
IBM delivered solid FY2025 results, with revenue rising 7.6% to $67.5 billion and net income surging 75.9% to $10.6 billion, driving diluted EPS from $6.43 to $11.17. Profitability metrics were healthy, with a 15.7% net margin and 15.3% operating margin, while the company maintained a $151.9 billion asset base. Financial leverage remains a consideration, with a debt-to-equity ratio of 1.68 and interest coverage of 5.3x. IBM's consistent but modest dividend growth and absence from any tracked macro theme contribute to a composite score of 62.5/100, earning it a Medium risk rating and a Research Candidate label.
Plain English
IBM grew its revenue steadily and nearly doubled its profits in FY2025, but it carries a fair amount of debt and pays out more than half its earnings as dividends, which keeps its overall score in the middle of the pack.
Bull Case vs. Bear Case
Bull Case
- Net income nearly doubled year-over-year, rising 75.9% to $10.6 billion in FY2025, with diluted EPS jumping from $6.43 to $11.17 — a dramatic acceleration in bottom-line profitability.
- IBM posted a 15.7% net margin and 15.3% operating margin in FY2025, demonstrating meaningful conversion of revenue into profit across a large $67.5 billion revenue base.
- IBM has grown its dividend per share every year from $6.59 in FY2022 to $6.71 in FY2025, reflecting a consistent multi-year commitment to returning capital to shareholders.
Bear Case
- IBM's debt-to-equity ratio of 1.68 in FY2025 signals meaningful financial leverage, which introduces risk if business conditions deteriorate.
- The most recent quarter (2026Q1) showed a notable sequential pullback, with revenue declining to $15.9 billion and operating income dropping to $1.4 billion from a 2025Q4 peak of $19.7 billion and $4.1 billion respectively.
- IBM's FY2025 dividend payout ratio of 59.0% is relatively high, limiting the company's flexibility to reinvest earnings or grow the dividend at a faster pace.
What Could Change the Picture
Bullish Triggers
- A sustained improvement in quarterly operating income above the 2025Q4 peak of $4.1 billion would signal that the bottom-line acceleration is durable rather than episodic.
- A reduction in the debt-to-equity ratio below 1.68 alongside maintained or improved interest coverage above 5.3x would strengthen the financial health picture.
Bearish Triggers
- If the 2026Q1 sequential revenue and operating income decline deepens in subsequent quarters, it would call into question whether the strong FY2025 annual results are sustainable.
- A further increase in the payout ratio beyond 59.0% without commensurate earnings growth could signal financial strain and limit future dividend increases.
Risk Profile
Medium RiskIBM carries meaningful leverage with a debt-to-equity ratio of 1.68 in FY2025, and while interest coverage of 5.3x suggests current debt serviceability, the sharp sequential decline in operating income from $4.1 billion in 2025Q4 to $1.4 billion in 2026Q1 highlights quarterly earnings volatility as an additional risk factor.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.