IBM — Valuation Models

Interactive models with editable assumptions. All calculations run client-side.

Valuation Summary

Model	Intrinsic Value	vs Price ($240.21)
DCF	$18136.35	+7450.2%
Graham Number	$93.50	-61.1%
Reverse DCF	—	implied g: 8.0%
DDM	$138.43	-42.4%
EV/EBITDA	$241.15	+0.4%

Values reflect default assumptions. Adjust inputs in each model below to update.

1 — Discounted Cash Flow (DCF)

Assumptions

Base FCF($B)Yahoo: $13.16B

Near-term growth (yrs 1–5)(%)Rev: 12.2% / EPS: 89.9%

Long-term growth (yrs 6–10)(%)

Terminal growth rate(%)

WACC(%)Computed: 6.94%

Computed WACC: 6.94%

Cost of equity (Re)8.10%(Rf 4.30% + β 0.69 × ERP 5.50%)

Cost of debt (Rd)3.70%(interest expense ÷ avg debt (SEC))

Tax rate (T)21.00%(US statutory fallback)

Equity weight (E/V)77.66%

Debt weight (D/V)22.34%

Results

Intrinsic Value / share$30169.62

Current Price$240.21

Upside / Downside+12459.7%

Net Debt (used)$50.19B

Sensitivity: WACC (rows) × Near-term g (cols)

WACC \ Near-term	81.9%	85.9%	89.9%	93.9%	97.9%
7.0%	$23923.25	$26666.86	$29656.42	$32908.10	$36438.81
8.0%	$18403.88	$20513.61	$22812.34	$25312.49	$28027.05
9.0%	$14656.28	$16335.70	$18165.45	$20155.43	$22315.94
10.0%	$11966.27	$13336.87	$14830.07	$16453.92	$18216.84
11.0%	$9956.21	$11096.11	$12337.88	$13688.23	$15154.13

2 — Graham Number

Assumptions

MultiplierGraham used 22.5 (15× P/E × 1.5× P/B)

EPS (trailing)($)Yahoo: $11.15

Book Value / share($)Yahoo: $34.84

Results

Graham Number$93.50

Current Price$240.21

Margin of Safety-61.1%

Formula: √(22.5 × max(0,EPS) × max(0,BVPS))

3 — Reverse DCF (Implied Growth)

Assumptions

WACC(%)Computed: 6.94%

Terminal growth rate(%)

Computed WACC: 6.94%

Cost of equity (Re)8.10%(Rf 4.30% + β 0.69 × ERP 5.50%)

Cost of debt (Rd)3.70%(interest expense ÷ avg debt (SEC))

Tax rate (T)21.00%(US statutory fallback)

Equity weight (E/V)77.66%

Debt weight (D/V)22.34%

Results

Current Price$240.21

Implied Near-term FCF Growth1.6%

Historical Revenue Growth12.2%

Historical Earnings Growth89.9%

Base FCF (TTM)$13.16B

Implied growth is the FCF growth rate (yrs 1–5) that makes the DCF intrinsic value equal the current price. Long-term growth is set to half the implied near-term rate.

4 — Dividend Discount Model (DDM)

Assumptions

Annual dividend D0($/share)Yahoo: $6.72

Dividend growth rate (g)(%)

Required return (r)(%)

Results

DDM Intrinsic Value / share$138.43

Current Price$240.21

Upside / Downside-42.4%

Formula: D0 × (1+g) / (r − g)

5 — EV/EBITDA Multiple

Assumptions

EBITDA($B)Yahoo: $16.12B

Target EV/EBITDA multipleCurrent: 17.1×

Net Debt($B)Default: $50.19B

Results

Implied Equity Value / share$241.15

Current Price$240.21

Upside / Downside+0.4%

Implied EV$275.60B

Sensitivity: EV/EBITDA multiple (rows) × Net Debt (cols)

Mult \ Net Debt	$24.19B	$37.19B	$50.19B	$63.19B	$76.19B
13.1x	$199.99	$186.08	$172.18	$158.27	$144.36
15.1x	$234.48	$220.57	$206.66	$192.76	$178.85
17.1x	$268.97	$255.06	$241.15	$227.24	$213.33
19.1x	$303.45	$289.54	$275.64	$261.73	$247.82
21.1x	$337.94	$324.03	$310.12	$296.22	$282.31

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