Infosys vs IBM Which Is a Better Investment?

Infosys and IBM are two prominent IT companies that have a significant presence in the global market. Both companies are publicly traded on the stock market, making them attractive investment options for many investors. Infosys, an Indian multinational corporation, has been known for its expertise in software development and technology services. On the other hand, IBM, an American multinational technology company, is known for its wide range of products and services in the IT industry. Investors often compare and analyze the performance of Infosys and IBM stocks to make informed investment decisions.

Infosys or IBM?

When comparing Infosys and IBM, 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 Infosys and IBM.

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. Infosys has a dividend yield of 2.92%, while IBM has a dividend yield of 2.66%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Infosys reports a 5-year dividend growth of 12.90% year and a payout ratio of 69.20%. On the other hand, IBM reports a 5-year dividend growth of 0.74% year and a payout ratio of 102.04%.

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 Infosys P/E ratio at 25.70 and IBM's P/E ratio at 38.64. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Infosys P/B ratio is 8.24 while IBM's P/B ratio is 8.52.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Infosys has seen a 5-year revenue growth of 0.65%, while IBM's is 0.03%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Infosys's ROE at 31.74% and IBM's ROE at 24.33%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $19.92 for Infosys and $247.01 for IBM. Over the past year, Infosys's prices ranged from $16.04 to $23.63, with a yearly change of 47.32%. IBM's prices fluctuated between $162.62 and $265.72, with a yearly change of 63.40%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.