(This story first appeared on Seeking Alpha (SA) today, and was written by Alessandro Pasetti, the founder of Hedging Beta.)
Summary
- The debate rages on over the valuation of IBM.
- I don’t know who is right, but my attention has been caught by trends for one non-cash item: stock-based compensation costs.
- On the one hand, it’s relatively easy to be bearish on IBM: revenues are falling and a decent yield comes with little potential for capital appreciation.
- On the other, the bulls are right to argue that IBM is a nice yield play based on a likely solid free cash flow profile over the medium term.
“It is the lone worker who makes the first advance in a subject; the details may be worked out by a team, but the prime idea is due to enterprise, thought and perception of an individual.” — Alexander Fleming.
I’m not going to join the debate between the bulls and the bears concerning the valuation of IBM (NYSE: IBM). Rather, I have decided to focus on a little detail that might help you decide whether IBM should be added to your core holdings.
Do you want to know more about that tiny little detail?
If you want to read the full article, please click here.