Last price Change Open Day high 52-week high 154.44 0.38 (0.25%) 154.10 154.90 1
ID: 2780174 • Letter: L
Question
Last price
Change
Open
Day high
52-week high
154.44
0.38 (0.25%)
154.10
154.90
182.79
Volume
Previous close
Day low
52-week low
768,907
154.06
153.94
139.13
IBM Corporation (NYSE: IBM) 10:43 AM ET on Nov 01, 2017
1) How has IBM’s stock been doing recently?
1) How has IBM’s stock been doing recently?
2) Assuming IBM's historical price-earnings ratio is 18, how does it currently stand?
3) Assuming its annual dividend yield is 2.5 percent, how does it currently stand?
4) Assuming IBM's historical "LT" (long-term) debt/equity is 100 percent, how does it currently stand? Generally speaking is it good or bad?
5) Assuming its historical return on assets is 10 percent, how does it currently stand? Generally speaking is it good or bad?
*SHOW WORK AND DATA PLZ :)
Last price
Change
Open
Day high
52-week high
154.44
0.38 (0.25%)
154.10
154.90
182.79
Volume
Previous close
Day low
52-week low
768,907
154.06
153.94
139.13
IBM Corporation (NYSE: IBM) 10:43 AM ET on Nov 01, 2017
Daily, $190.00 185.00 180.00 175.00 170.00 165.00 160.00 155.00 150.00 145.00 140.00 135.00 Nov Dec 2017 Feb Mar Apr May Jun Jul Aug Sep Oct 33.52 M 27.93 22.35 16.76 11.17 hit 5.59 Inul IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIMln Inlan INDIIIIIIIIIIIIIIIIIIIIIAl 0.00Explanation / Answer
1.) IBM stock is not performing well recently as it has lost major value since past 9 months (Down 15.72% from peak). It is still down from its highest peak of $182.79 achieved in Feb-17. Though, it has started recovering and regaining its lost ground in the past 3 months where it has risen from $140 to $154.06/share.
2.) Current P/E ratio is 12.80 against last year of 18.0
=> IBM stock is now better investment as compared to last year and can be considered as a Value pick.
The drop in P/E is contributed by drop in Stock price and may be due to increase in EPS for current year.
3.) Current dividend yield is 3.9% as compared to last year yield of 2.5%
This means higher earnings for the investors compared to last year. Another reason of increase can be fall in stock price as it appears in the denominator while calculating the stock yield.
4.) Historical Long Term D/E ratio =100
Current Long Term D/E Ratio =204
Long term debt to equity of 100 indicates that for $ of equity, IBM used 1$ debt. It is a healthy ratio if it is maintained for the long term. This also shows that over a long term IBM is not overleveraged.
Currently, higher D/E ratio indicates that for $ of equity, IBM has used 2$ debt. This indicates currently it is more leveraged than its long standing history.
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