Is IBM Stock a Buy?
Is IBM a bargain or a value trap? The numbers point to a cheap stock with a 3% yield.
Overview
International Business Machines' (NYSE: IBM) stock isn't setting the world on fire right now. As of Oct. 1, the tech veteran's shares have dropped 2% in a month and 22% over the last quarter. Big Blue's stock is changing hands at 3.1 times trailing sales and 15.5 times free cash flow -- lukewarm multiples usually attached to slow-growth retailers rather than innovative tech giants.
Here's a fun contrast. While the biggest names in tech pour hundreds of billions of dollars into AI data centers and fight over consumers' attention, IBM is leaning back in a comfortable chair. It already owns mainframes and Linux machines that run the world's banks, and those customers aren't going anywhere.
Details
IBM's stability doesn't make headlines. Mainframes are cyclical, and the latest quarter was a lull. But a lull in a business that makes up only 15% of IBM's total revenues is hardly a crisis. At the same time, Red Hat's OpenShift grew 29%, and distributed infrastructure sales jumped 37% year over year. Yet, IBM's stock crashed in July after reporting record results.
Source
Originally published at www.fool.com.