Is International Business Machines Corp. overvalued or undervalued?

As of 4 September 2025, the valuation grade for International Business Machines Corp. has moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is currently overvalued, as reflected by its P/E ratio of 80, which is substantially higher than its peers, such as Cisco Systems, Inc. with a P/E of 23.85 and Accenture Plc at 21.26. Additionally, the EV to EBITDA ratio stands at 41.61, further emphasizing the premium at which IBM is trading compared to the industry.
In terms of performance, IBM has shown strong returns, with a 1Y return of 23.29%, outpacing the S&P 500's 17.14% over the same period. However, despite these positive returns, the valuation metrics suggest that the stock is not justified at its current price levels. With a Price to Book Value of 22.81 and an EV to Sales ratio of 10.50, the company's financials indicate that it is trading at a significant premium relative to its industry peers.