International Business Machines Corporation

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker Analyst Analyst Email
RBC Capital Markets Amit Daryanani amit.daryanani@rbccm.com
Drexel Hamilton Brian J. White bwhite@drexelhamilton.com
Stifel Nicolaus David Grossman dgrossman@stifel.com
JMP Securities Greg Mcdowell gmcdowell@jmpsecurities.com
Jefferies James Kisner jkisner@jefferies.com
Atlantic Equities Josep Bori j.bori@atlantic-equities.com
Cantor Fitzgerald Joseph D. Foresi jforesi@cantor.com
Daiwa Securities Co. Ltd. Kazuya Nishimura kazuya.nishimura@us.daiwacm.com
BMO Capital Markets Keith Bachman keith.bachman@bmo.com
Credit Suisse Kulbinder Garcha kulbinder.garcha@credit-suisse.com
Wells Fargo Securities Maynard J. Um maynard.um@wellsfargo.com
Societe Generale Richard Nguyen richard.nguyen@sgcib.com
Deutsche Bank Research Sherri Scribner sherri.scribner@db.com
Bernstein Research Toni M. Sacconaghi Jr sacconaghi@bernstein.com

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Primary Input Data

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Derived Input Data

Derived Input

Label

2015 Value

2016
Value

Equational Form

Net Operating Profit Less Adjusted Taxes NOPLAT  9,862  8,010 NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)
Free Cash Flow FCF  13,429 13,391 FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS
Tax Shield TS 93 28 TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income
Invested Capital IC  76,226 81,195 IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital
Return on Invested Capital ROIC  12.94% 9.87% ROIC\,=\,\frac { NOPLAT }{ IC }
Net Investment NetInv 2,149  9,350 NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation
Investment Rate IR  21.79% 116.73% IR\,=\,\frac {NetInv}{NOPLAT}
Weighted Average Cost of Capital
WACCMarket  11.60%  12.32% WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)
 WACCBook   6.79%   7.77%
Enterprise value
EVMarket  163,742  189,867 EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash
 EVBook  158,138  183,133
Long-Run Growth
g = IR x ROIC
  2.82%  11.52% Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
g = % \Delta GDP   2.50%   2.50%
Margin from Operations M  18.56%  15.42% M\,\,=\,\,\frac{EBIT}{SALES}
Depreciation/Amortization Rate D  20.26%  26.23% D\,\,=\,\,\frac{D+A}{EBITDA}

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form

Observed Value

Single-stage

multiple g solution

Two-stage valuation

model g solution

12/31/2015 12/31/2016 12/31/2015 12/31/2016 12/31/2015 12/31/2016

EV/SALES 

\frac {EV}{Sales} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)

 2.00  2.38  10.44%  14.15%  10.60%  13.58%

EV/EBITDA

\frac {EV}{EBITDA} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)

8.61 11.37 10.44% 14.15% 10.60% 13.58%

EV/NOPLAT

\frac {EV}{NOPLAT} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}

16.60 23.70 10.44% 14.15% 10.60% 13.58%

EV/FCFOPS

\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)

12.19 14.18 10.44% 14.15% 10.60% 13.58%

EV/EBIT

\frac {EV}{EBIT} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)

10.79 15.41 10.44% 14.15% 10.60% 13.58%

EV/IC

\frac {EV}{IC} \,= \,\frac{ROIC\,  -\,  g}{WACC\,-\,g}

2.15 2.34 10.44% 14.15% 10.60% 13.58%

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