A Tale of Two Stocks

 

IBM

MSFT

Revenue (TTM) $101.62 billion $68.62 billion
Profit (TTM) $15.1 billion $21.79 billion
Net Margin 14.9% 31.8%
Price/Earnings 14.28 9.72
Forward P/E 11.67 8.84
Price/Sales 2.03 3.01
PE/Growth 1.33 0.9
Price/FCF 19.19 10.74
Dividend Yield 1.76% 2.61%
Debt/Equity 1.33 0.22
EPS 5 yr growth 18.59% 13.34%
Revenue 5 yr growth 1.85% 9.45%

Source: www.finviz.com

4 thoughts on “A Tale of Two Stocks

  1. john ludwig

    i’ve had no MSFT holdings for years…the story around the stock continues to be bleak…but when do you make the bet that it just can’t get any worse, and a management/cultural shift has to take place within the investment horizon, and so it is time to take a small position? The board has to be unsatisfied.

  2. Charles Fitzgerald Post author

    Hedge funds broadly and the value guys in particular are piling into the stock, both on the numbers above and I think they are betting on a regime change pop. The risk is the value story has been true for years yet the multiple has continued to drop.

    It is hard to believe the market puts almost a 50% premium on a dollar of profit from IBM, who are a no-growth financial engineering company.

  3. john ludwig

    yes i challenged some value guys on their thinking and declined to be put money in because of this thinking. felt too early. as you say the value story has been true for years. some forcing incident will have to happen to cause a change in strategy/culture.

  4. Pingback: IBM: How Much Longer Do the Good Times Last? | Platformonomics

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