International Business Machines stock closed at US$249.10, and Simply Wall St says IBM stock is 27.2% undervalued on its DCF estimate. Investors in International Business Machines are weighing that gap against a 9.4% drop over the past week and a longer record that still shows gains over three and five years.
The valuation framework points to an intrinsic value of $342.19 per share, based on a 2 Stage Free Cash Flow to Equity approach. Simply Wall St assigns the stock a score of 3 out of 6, with latest twelve-month free cash flow of about $12.16b and projected free cash flow of $21.82b in 2030.
International Business Machines DCF
The DCF output is straightforward math: the model compares the estimated per-share value of $342.19 with the last close of US$249.10. That difference leaves the stock 27.2% below the model value under Simply Wall St's assumptions.
The recent move also sits inside a broader run of mixed performance. International Business Machines stock gained 12.0% over the past month, but it declined 14.5% year to date and 9.8% over one year, even after rising 109.2% over three years and 118.1% over five years.
IT industry P/E
The valuation picture is less simple when price-to-earnings is added. International Business Machines trades on a P/E of 21.8x, above the IT industry average of 16.4x and the peer average of 10.3x.
Simply Wall St's Fair Ratio for International Business Machines stands at 34.2x, which leaves room between the current multiple and its own reference point. That gap gives Investors in International Business Machines a reason to separate the market multiple from the cash-flow model instead of treating them as the same signal.
The practical read is narrow but useful: the stock can look expensive on P/E and still screen as undervalued on DCF if the market is discounting future cash generation too heavily. For Investors in International Business Machines, the next step is to decide whether the cash-flow path implied by $21.82b in 2030 is credible enough to justify paying above the industry average now.
Recent headlines around International Business Machines have focused on the evolving business mix and how it shapes expectations for cash flows and balance sheet resilience. That is the point to test against the valuation work: if those cash flows hold up, the DCF case has support; if they do not, the higher P/E leaves less margin for error.
