IBM Stock Price: Cheaper Than Peers, But Growth Slows

International Business Machines (IBM) stock has been trading at a relatively low price-to-earnings ratio of 19.9 times its past year's earnings, making it about 10% cheaper than the median S&P 500 company.

The company's revenue grew 7.9% over the last twelve months, with software sales increasing by 10.6% in fiscal 2025. Despite this growth, profits have increased faster than sales, with an operating margin of 18.4% over the past year, up from 14.4% three years earlier.

However, IBM's revenue growth has been slower than the S&P 500 average over the last three years, growing at an average rate of 4.5% per year compared to 5.8% for the broader market. The latest quarter showed a slowdown in revenue growth, with a 1% increase in fiscal Q2 2026, down from 9.5% in the previous quarter.

Management attributed this slowdown to clients delaying transactions due to supply chain issues, but noted that some of these deals have already closed. The company now expects full-year 2026 revenue growth of 4% to 5%, with software growth expected at 6% to 8%. Investors appear skeptical about the company's ability to rebound quickly.