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IBM: Growth Available For Free With Fair Chance For Success

In a previous article on the International Business Machines Corporation (NYSE: [[IBM]]), we wrote that IBM's shares were "undervalued (even though) financial performance has underachieved relative to the market, its industry, and its previous levels of performance." The valuation itself was derived from a P/E multiple standpoint, with IBM valued at 8.7× 2016E EPS.

This article we're writing today adds more color to IBM's portrait from a long-term, "quantamental" aspect. We noted that IBM's business, as it presently stands, exposes its investors to low-to-moderate risks. Additionally, the market has not taken IBM's underachieving financial performance well and deflated the price so much they practically offer future growth for free.

Given the strength of IBM's competitive advantages and key points highlighted in the most recent earnings call, we believe "zero growth" over the long-term is a low hurdle for the company. IBM has a fair chance of succeeding and surprising us… Read More …