International Business Machines (XTER:IBM) Operating Margin % Explanation
Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
International Business Machines Operating Margin % Related Terms
International Business Machines Operating 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 Operating Margin % Chart
XTER:IBM vs ACN, FISV, CTSH: Operating Margin % Comparison
For the Information Technology Services subindustry, International Business Machines's Operating Margin %, along with its competitors' market caps and Operating 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 Operating Margin % vs Software Industry
For the Software industry and Technology sector, International Business Machines's Operating Margin % distribution charts can be found below:
* The bar in red indicates where International Business Machines's Operating Margin % falls into.
International Business Machines Operating Margin % Calculation
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
* 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 (XTER:IBM) has a Operating Margin % of 13.94% as of Mar. 2026. Operating margin is the ratio of total operating income to net sales. View historical data on International Business Machines and its competitors. This is 11% below median its historical median of 15.61. Over the past decade, International Business Machines' Operating Margin % has ranged from 8.45 to 18.79. According to the industry distribution chart, International Business Machines ranks #375 out of 2818 companies in the Software industry, placing it in the top 13.3%.
Is International Business Machines' Operating Margin % too high?
International Business Machines' current Operating Margin % of 13.94% is 11% below median its 10-year median of 15.61. Over the past 10 years, this metric has ranged from a low of 8.45 to a high of 18.79. The Software industry median Operating Margin % is 3.88. International Business Machines' value of 13.94% is 259.7% above this industry median. Based on the distribution chart, International Business Machines ranks #375 out of 2818 companies in the Software industry, which is in the top quartile — a strong position relative to peers. Overall, International Business Machines has a GF Score™ of 69/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does International Business Machines' Operating Margin % compare to ACN and FISV?
According to the Software industry distribution chart, International Business Machines ranks #375 out of 2818 companies for Operating Margin %. This places International Business Machines in the top 13% of its industry — outperforming the majority of peers. The industry median Operating Margin % is 3.88. International Business Machines' value of 13.94% is 259.7% above this benchmark. Historically, International Business Machines' own Operating Margin % has ranged from 8.45 to 18.79 over the past decade. While the company's 10-year median is 15.61 vs. the industry median of 3.88, 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 Operating Margin % for a Software company?
The median Operating Margin % among Software companies is 3.88, based on 2,818 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. International Business Machines's current Operating Margin % of 13.94% is 259.7% 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 Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on International Business Machines and its competitors. For the Software industry, the median Operating Margin % is 3.88 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. International Business Machines's current Operating Margin % is 13.94%, which is 11% below median its own 10-year median of 15.61. 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 (XTER:IBM) is currently considered Modestly Overvalued. The stock's GF Value™ is €209.60, compared to a current price of €232.50 — trading 10.9% above its estimated fair value. The current Operating Margin % is 13.94%, which is 11% below median its 10-year median of 15.61 and 259.7% above the Software industry median of 3.88. 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 Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For International Business Machines (XTER:IBM), the current Operating Margin % is 13.94% 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 (XTER:IBM) Overvalued in 2026?
Based on GuruFocus' analysis, International Business Machines stock appears to be overvalued.
The current stock price of €232.50 is trading 10.9% above its estimated GF Value™ of €209.60.
GuruFocus considers International Business Machines to be Modestly Overvalued.
Key valuation signals for XTER:IBM:
Operating Margin %: 13.94% (11% below median its 10-year median of 15.61)
GF Value™: €209.60 vs. price of €232.50 (10.9% above fair value)
Industry Position: 259.7% above the Software median (#375 of 2818)
No single metric tells the full story. See the XTER: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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