Is IBM Stock A Real Bargain?

International Business Machines (IBM) stock trades at 19.9 times the past year’s earnings. The median S&P 500 company trades at 22.1 times. The shares lost 14.4% over the last twelve months, while the S&P 500 returned 17.1%. Is IBM a good business on sale, or a fair price for one whose growth has stalled? The answer starts with what the price buys you today.

How Big A Bargain Is IBM Stock?

IBM stock is about 10% cheaper than the median S&P 500 company on the price-to-earnings ratio, or P/E. The P/E tells you how many dollars you pay for each $1 of a year’s profit. So IBM is cheaper, but not by much.

You get a solid business for that price. IBM sells software, consulting and infrastructure such as mainframe computers, with what management calls a strong presence among the Fortune 1000. Software is the largest piece, with revenue up 10.6% in fiscal 2025. Total revenue over the past twelve months grew 7.9% from a year earlier.

Profits have grown faster than…