IBM vs Apple Which Is a Smarter Choice?

IBM and Apple are two of the largest and most influential technology companies in the world. Both companies have a long history of innovation and strong financial performance. When comparing their stocks, investors may notice distinct differences in their business models, revenue streams, and growth potential. IBM, a legacy player in the technology industry, has a strong presence in enterprise computing and services. On the other hand, Apple is known for its consumer-focused products and ecosystem. Understanding the strengths and weaknesses of each company can help investors make informed decisions when considering investing in IBM vs Apple stocks.

IBM or Apple?

When comparing IBM and Apple, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between IBM and Apple.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. IBM has a dividend yield of 2.89%, while Apple has a dividend yield of 0.4%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IBM reports a 5-year dividend growth of 1.32% year and a payout ratio of 95.65%. On the other hand, Apple reports a 5-year dividend growth of -19.56% year and a payout ratio of 16.25%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with IBM P/E ratio at 33.21 and Apple's P/E ratio at 40.16. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IBM P/B ratio is 8.69 while Apple's P/B ratio is 66.10.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IBM has seen a 5-year revenue growth of -0.22%, while Apple's is 0.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IBM's ROE at 27.14% and Apple's ROE at 137.87%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $230.26 for IBM and $246.24 for Apple. Over the past year, IBM's prices ranged from $157.89 to $239.35, with a yearly change of 51.59%. Apple's prices fluctuated between $164.08 and $250.80, with a yearly change of 52.85%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.