International Business Machines (MEX:IBM) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
International Business Machines had a gross margin of 56.23% for the quarter that ended in Mar. 2026 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
International Business Machines Gross Margin % Related Terms
International Business Machines Gross Margin % Historical Data
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
International Business Machines Gross Margin % Chart
MEX:IBM vs ACN, FISV, CTSH: Gross Margin % Comparison
For the Information Technology Services subindustry, International Business Machines's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
International Business Machines Gross Margin % vs Software Industry
For the Software industry and Technology sector, International Business Machines's Gross Margin % distribution charts can be found below:
* The bar in red indicates where International Business Machines's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
International Business Machines (MEX:IBM) has a Gross Margin % of 56.23% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on International Business Machines and its competitors. This is near median its historical median of 54.77. Over the past decade, International Business Machines' Gross Margin % has ranged from 46.41 to 58.36. According to the industry distribution chart, International Business Machines ranks #833 out of 2685 companies in the Software industry, placing it in the top 31%.
Is International Business Machines' Gross Margin % too high?
International Business Machines' current Gross Margin % of 56.23% is near median its 10-year median of 54.77. Over the past 10 years, this metric has ranged from a low of 46.41 to a high of 58.36. The Software industry median Gross Margin % is 40.45. International Business Machines' value of 56.23% is 39% above this industry median. Based on the distribution chart, International Business Machines ranks #833 out of 2685 companies in the Software industry, which is above the industry midpoint. Overall, International Business Machines has a GF Score™ of 69/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does International Business Machines' Gross Margin % compare to ACN and FISV?
According to the Software industry distribution chart, International Business Machines ranks #833 out of 2685 companies for Gross Margin %. This puts International Business Machines in the upper half of its industry. The industry median Gross Margin % is 40.45. International Business Machines' value of 56.23% is 39% above this benchmark. Historically, International Business Machines' own Gross Margin % has ranged from 46.41 to 58.36 over the past decade. While the company's 10-year median is 54.77 vs. the industry median of 40.45, International Business Machines has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.45, based on 2,685 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. International Business Machines's current Gross Margin % of 56.23% is 39% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on International Business Machines and its competitors. For the Software industry, the median Gross Margin % is 40.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. International Business Machines's current Gross Margin % is 56.23%, which is near median its own 10-year median of 54.77. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is International Business Machines stock overvalued right now?
Based on GuruFocus' analysis, International Business Machines (MEX:IBM) is currently considered Fairly Valued. The stock's GF Value™ is MXN4,255.36, compared to a current price of MXN4,600.00 — trading 8.1% above its estimated fair value. The current Gross Margin % is 56.23%, which is near median its 10-year median of 54.77 and 39% above the Software industry median of 40.45. International Business Machines' overall GF Score™ is 69/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For International Business Machines (MEX:IBM), the current Gross Margin % is 56.23% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is International Business Machines (MEX:IBM) Overvalued in 2026?
Based on GuruFocus' analysis, International Business Machines stock appears to be overvalued.
The current stock price of MXN4,600.00 is trading 8.1% above its estimated GF Value™ of MXN4,255.36.
GuruFocus considers International Business Machines to be Fairly Valued.
Key valuation signals for MEX:IBM:
Gross Margin %: 56.23% (near median its 10-year median of 54.77)
GF Value™: MXN4,255.36 vs. price of MXN4,600.00 (8.1% above fair value)
Industry Position: 39% above the Software median (#833 of 2685)
No single metric tells the full story. See the MEX:IBM stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
International Business Machines Business Description
Incorporated in 1911, International Business Machines, or IBM, is one of the oldest technology companies in the world. It provides software, IT consulting services, and hardware to help business customers modernize their technology workflows. IBM operates in 175 countries and employs approximately 300,000 people. The company has a robust roster of business partners to service its clients, which includes 95% of all Fortune 500 companies. IBM's products, including Red Hat, watsonx, and mainframes, handle some of the world's most important data workloads in areas like finance and retail.
69GF Score
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