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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

9 Dow Dividend Stocks Get an A+ Buy-Rating

Stocks in this article: PFE KO MRK KFT HD

IBM

International Business Machines

Dividend Yield: 1.64%

IBM's gross profit margin for the second quarter of its fiscal year 2012 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. IBM has weak liquidity. Currently, the Quick Ratio is 0.98 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 11.48% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

The current P/E ratio indicates a significant discount compared to an average of 25.56 for the IT Services industry and a value on par with the S&P 500 average of 16.49. For additional comparison, its price-to-book ratio of 11.52 indicates a significant premium versus the S&P 500 average of 2.28 and a significant premium versus the industry average of 7.96. The price-to-sales ratio is well above the S&P 500 average, but well below the industry average. The valuation analysis reveals that, IBM seems to be trading at a discount to investment alternatives within the industry.

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