Critical Survey: Toshiba (TOSYY) and IBM (IBM)

IBM (NYSE:IBM) and Toshiba (OTCMKTS:TOSYY) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, risk, valuation and profitability.

Institutional and Insider Ownership

56.4% of IBM shares are owned by institutional investors. Comparatively, 0.1% of Toshiba shares are owned by institutional investors. 0.2% of IBM shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

IBM has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Toshiba has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Dividends

IBM pays an annual dividend of $6.28 per share and has a dividend yield of 4.6%. Toshiba does not pay a dividend. IBM pays out 45.5% of its earnings in the form of a dividend. IBM has raised its dividend for 19 consecutive years.

Analyst Ratings

This is a summary of current recommendations for IBM and Toshiba, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
IBM 2 10 8 0 2.30
Toshiba 0 0 0 0 N/A

IBM currently has a consensus target price of $155.76, suggesting a potential upside of 13.00%. Given IBM’s higher possible upside, equities research analysts clearly believe IBM is more favorable than Toshiba.

Valuation and Earnings

This table compares IBM and Toshiba’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
IBM $79.59 billion 1.57 $8.73 billion $13.81 9.98
Toshiba $37.24 billion 0.55 $7.59 billion N/A N/A

IBM has higher revenue and earnings than Toshiba.

Profitability

This table compares IBM and Toshiba’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
IBM 10.97% 68.61% 10.28%
Toshiba 51.19% 11.02% 3.62%

Summary

IBM beats Toshiba on 12 of the 14 factors compared between the two stocks.

IBM Company Profile

International Business Machines Corporation operates as an integrated technology and services company worldwide. Its Cognitive Solutions segment offers Watson, a computing platform that interacts in language, processes big data, and learns from interactions with people and computers. This segment also offers data and analytics solutions, including analytics and data management platforms, cloud data services, enterprise social software, talent management solutions, and tailored industry solutions; and transaction processing software that runs mission-critical systems in banking, airlines, and retail industries. The company's Global Business Services segment offers business consulting services; delivers system integration, application management, maintenance, and support services for packaged software applications; and finance, procurement, talent and engagement, and industry-specific business process outsourcing services. Its Technology Services & Cloud Platforms segment provides cloud, project-based, outsourcing, and other managed services for enterprise IT infrastructure environments. This segment also offers technical support, and software and solution support; and integration software solutions. The company's Systems segment offers servers for businesses, cloud service providers, and scientific computing organizations; data storage products and solutions; and z/OS, an enterprise operating system. Its Global Financing segment provides lease, installment payment plans, and loan financing services; short-term working capital financing to suppliers, distributors, and resellers; and remanufacturing and remarketing services. International Business Machines Corporation has a strategic partnership with Samsung Electronics to manufacture microprocessors. The company was formerly known as Computing-Tabulating-Recording Co. and changed its name to International Business Machines Corporation in 1924. The company was founded in 1911 and is headquartered in Armonk, New York.

Toshiba Company Profile

Toshiba Corporation, together with its subsidiaries, manufactures and markets electronic and electrical products and systems worldwide. It operates through six segments: Energy Systems & Solutions, Infrastructure Systems & Solutions, Retail & Printing Solutions, Storage & Electronic Devices Solutions, Industrial ICT Solutions, and Others. The company offers infrastructure systems, including power, transmission and distribution, industrial, railway transportation, security and automation, broadcasting and network, water and environmental, building, and POS systems; airport facilities and solid-state weather radars; elevators and escalators; and printing and IT solutions. It also provides electronic devices and components, such as semiconductors, storage products, microwave semiconductors and components, materials and devices, and display devices and components; and digital products comprising computers and tablets, memory products, SSDs, televisions, Blu-ray products, and home appliances. In addition, the company offers nuclear power generation systems, thermal power generation systems, light fixtures, air-conditioners, building and facility solutions, multi-function peripherals, hard disk drives, cloud solutions, visual products, etc. Toshiba Corporation was founded in 1875 and is headquartered in Tokyo, Japan.

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