If the heyday of a company is measured by the number of times its stock price splits, the future is ominous for IBM.
The first IBM stock split took place in 1964, over fifty years after International Business Machines was founded in 1911.
Back in the swinging sixties if you had to bet which way IBM was headed, the safe bet would have been higher.
IBM shares split on a 5-to-4 basis back then meaning if you owned 4 shares prior to the split, you would have owned 5 after the split.
|Date||IBM Stock Split History|
|May 18 1964||5:4|
|May 18 1966||3:2|
|April 23 1968||2:1|
|May 29 1974||5:4|
|June 1 1979||4:1|
|May 28 1997||2:1|
|May 27 1999||2:1|
In the 1960s alone, shares split three times. And before the century was out, another four splits took place.
A buy-and-hold investor who held 100 shares before the first stock split would have owned 7,500 shares by the turn of the new millennium.
So that 100 share investment would have grown to approximately $1,125,000. Not a bad pay day for putting your faith in perhaps the most innovative technology company of its day.
Since the turn of the century, IBM splits have been non-existent. The failure of IBM’s share price to gain any traction in recent years is the likely reason why management has decided against another split.
Perhaps nothing highlights the lack of “umph” behind the stock as much as its revenue profile. IBM revenues have either declined or stagnated at best in recent years depending on the time frame you examine.
Even Warren Buffett decided enough was enough and abandoned ship. He sold his position and instead built a stake in Apple, which has already been a big winner for his holding company, Berkshire Hathaway.
For long-term oriented investors, it’s not all gloom and doom. The IBM stock dividend at the time of our research was 4.2%. That’s quite a payout for a technology company that has a pipeline of future innovations which could spark growth.
Investors hoping for a bullish IBM stock price forecast will need to peg their hopes to stabilizing revenues, new partnerships, and future innovations.
The IBM Watson deep learning artificial intelligence tool is aimed at business seeking to use AI to improve processes and boost revenues. From changing business workflows to analyzing tennis stats the U.S. Open, Watson does it all. With any luck for bullish investors, more businesses will adopt IBM Watson as a way to cut costs and boost top line figures.
Watson is also aimed at the massive healthcare industry. The goal is to produce value-based care that is more aligned with patient outcomes.
Another growth lever could be the company’s blockchain initiatives. IBM LedgerConnect is designed for financial services companies who want to apply blockchain to build new applications.
The applications of IBM’s technology knows almost no bounds. For example, IBM blockchain technology is used by Maersk to simplify shipping logistics and operations.
From a financial perspective, the IBM price/earnings ratio (trailing) is still north of 20, which is lofty. But the IBM return on equity figure is over 30% and almost half its revenues stem from next generation technologies. So while a glance at IBM stock price history isn’t going to thrill long-term investors, the future may well be brighter.