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| Finally, the Financing segment assists clients by providing a variety of services such as lease financing, instalment payment options, loan financing, and short-term working capital solutions. | | Finally, the Financing segment assists clients by providing a variety of services such as lease financing, instalment payment options, loan financing, and short-term working capital solutions. |
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| <Youtube>ytJ4G1fhhgs</Youtube>
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| == Team == | | == Team == |
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| [[File:Implied premium.png|center|thumb|481x481px]] | | [[File:Implied premium.png|center|thumb|481x481px]] |
| == Looking forward == | | == Looking forward == |
| Within this next section, I cover the sensitivity analysis, peer group comparison, and product lines from a future perspective for IBM. Any and all recent updates which will effect the company in future years will be discussed here, including changes to the product line, valuation in terms of considering the company by comparing it to its peers to see if it is over or under-valued and how the forecasted share price may change with time depending on updates and revisions being made to either the capital structure (which will effect the WACC) or the growth rate (due to changes in the world economic outlook forecasts).
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| == Sensitivity analysis == | | == Sensitivity analysis == |
| The purpose of a sensitivity analysis is to provide the reader with more depth of knowledge of the valuation process. In a situation in which the reader agree with the general principles and methodologies of valuation utilised by the analyst, but disagrees with some of the calculated or estimated numbers due to the assumptions used to arrive at said numbers, the sensitivity analysis provides further scenarios that can be considered by the reader of the valuation.
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| Firstly, the implied premium has been sensitised. It should be noted that even tiny changes to the WACC or growth rate can lead to large changes in the future share price.
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| [[File:Sensitivity1 .png|center|thumb|665x665px]]
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| Next, the enterprise value has been sensitised. It should be noted that these values are still in millions of dollars.
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| [[File:Sens2.png|center|thumb|666x666px]]
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| With the inclusion of this sensitivity analysis, the reader can get a better understanding of the large scale changes that can occur at different estimations of both the growth rate and the WACC. It also allows the reader to keep either one of the variables constant, while changing the other, incase they agree with the justifications for one variable but not the other.
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| == Peer group comparison == | | == Peer group comparison == |
| IBM has a large variety of potential competitors due to their diverse range of services offered. A list of similar companies can be seen below.
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| Taking the Price to Earnings ratio and Enterprise value to EBITDA multiple for IBM, and comparing it with the mean of IBM's identified peer companies, it can be seen that IBM is undervalued when considering the PE ratio, but overvalued when looking at the EV/EBITDA multiple.
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| [[File:Peer group.png|center|thumb|420x420px]]
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| == Product lines == | | == Product lines == |
| As of 2023, IBM operates within 3 inter-related industries and a fourth which is less related to the rest of the business. The primary business lines are:
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| * Software
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| * Consulting
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| * Infrastructure
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| Additionally, IBM also contains a Financing division, which makes up only 1% of its revenues.
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| The overall business line sizes are summarised below in the pie chart:
| | == Primary risk factors == |
| [[File:Pie.png|center|thumb|301x301px]]Recently, IBM separated a large portion of their infrastructure business into a separate company named Kyndryl. This move was performed in order to keep up with the growing competition within the managed infrastructure business that deals with hybrid cloud management services. This will allow IBM to refine their business, to grow into a firm with a focus on the software and consulting industry. Financing operations have also been winding down as the company believes that it can best deliver results with their software and consulting divisions.
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| == References == | | == References == |
| __INDEX__ | | __INDEX__ |
