Is International Business Machines Corp. overvalued or undervalued?

As of 23 April 2025, the valuation grade for International Business Machines Corp. has moved from expensive to very expensive. The company is currently overvalued, with a P/E ratio of 80, a Price to Book Value of 22.81, and an EV to EBITDA ratio of 41.61. In comparison, Cisco Systems, Inc. has a P/E ratio of 24.57 and Accenture Plc has a P/E of 26.54, indicating that IBM's valuation is significantly higher than its peers.
Additionally, while IBM has a strong ROE of 28.33% and a ROCE of 15.18%, these figures do not justify the elevated valuation levels. The recent stock performance shows that IBM has outperformed the S&P 500 with a YTD return of 31.55% compared to the index's 2.44%, but this does not mitigate the overvaluation concern. Overall, the metrics suggest that IBM's stock price is not supported by its financial fundamentals relative to its industry peers.