International Business Machines Corp. (NYSE:IBM)

CAPS Rating: 4 out of 5

The Company is a globally integrated innovation company, serving the needs of enterprises and institutions worldwide.

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Player Avatar JohnCLeven (75.29) Submitted: 9/3/2012 8:55:50 PM : Outperform Start Price: $176.69 IBM Score: -65.14

I have to agree with the wise Nebraskan Sensei (yes I just made that up) on this one. IBM is a wonderful, consistent company at a fair price. My only concern is the lonterm durability of IBM's moat due to being a tech company. Looks great for the medium term at least.

Quality
5 yr avg ROIC 18.7% (93rd percentile), 5 yr avg ROE 59% (98th percenile), 10 yr FCF CAGR 13%, FCF/sales% 15% (cash king). The share count has decreased by about 4.5% per yer for the past 8 years. Reasonable debt level. DIV around 1.6%

Valuation
14x FCF, 14x P/E, 15x EV/FCF, 8.47x 5 yr P/E

I'm conservatively forcasting 12%-15% compounded returns, including reinvested dividends for the next 2-5 years. I got a feeling the S&P ain't gonna keep up with that. Very likely purchasing in RL for my father's portfolio that I manage.

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Member Avatar JohnCLeven (75.29) Submitted: 5/30/2013 4:41:38 PM
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Purchased shares of IBM today.

1st new buy in 6 months.

New portfolio allocation = COH (21%), BRK.B (20%), MCD (17%), IBM (15%), AAP (15%), and UPS (12%)

Member Avatar JohnCLeven (75.29) Submitted: 10/29/2013 12:57:00 PM
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o Per Seeking Alpha: IBM adds $15B to buyback program, shares move higher, the new funds, approved at a board meeting, raise IBM's (IBM +2.2%) total buyback authorization to $20.6B, good for repurchasing 10.4% of outstanding shares. (PR)
o Big Blue has been spending aggressively on buybacks, which (along with lower tax rates and margin improvements) have helped keep EPS growth positive in the face of revenue declines. Buybacks amounted to $1.9B in Q3, and $3.6B in Q2.
o IBM added $5B to its buyback program both in April and last October. The company also hiked its dividend by 12% in April. A major new buyback approval was widely expected today.

Note to self: If the price hypothetically unchanged, the combined buyback 10.4% and dividend yield 2.1 = a potential 12.5% annual payout. (That's pretty attractive)

In reality, i'd expect it to be less than that because the share price will likely rise. Forget the exact numbers though, be main message i'm trying to send, the IMPORTANT message, is that IBM is rewarding it's shareholders with a lot of cash relative to current prices. Roughly 4.4B in dividends plus roughly 20.6B in potential buybacks = about $25 billion return to shareholders in next 12 months or so. Divide that by the $198.3B market cap and you get roughly a 12.6% yield at current prices.

Not too shabby.

Allocation as of earlier this month = 39% IBM, 18% BRK.B, 16% COH, 15% MCD, 12% LUK

Member Avatar valuemoneygreen (79.05) Submitted: 10/29/2013 2:08:20 PM
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Currently my allocation as of today = 68.5% WFC, 31.5% IBM, < 1% cash

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