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Screen ibm peers value
Date: 2026-07-14 · Trigger: After IBM's −26% Q2-warning day, hunt value in IBM's own field — diversified enterprise IT: hybrid-cloud & infrastructure software, IT services/consulting, systems/hardware, mature dividend tech. Method: Candidate discovery (web) → filter against existing coverage → quick health check (roic.ai margins/ROIC/multiples + live Public.com quotes). Screen-tier, not a full pipeline. Prices ~after-hours 7/14 (approx; wide AH spreads).
Not a duplicate: the 7/13 "value-gems" screen was semis/AI-hardware (PLAB/ON/VRNS); the 6/11 "consulting-moat" screen covered only the services leg (ACN/BAH/LDOS/CTSH). IBM-style diversified-IT value hadn't been screened — and today's rout just repriced the complex.
The key insight from today
IBM's miss wasn't "IT is dying" — it was budget rotating from software → servers/storage/memory/networking (Krishna's words). That splits IBM's peer group cleanly:
- On the right side of the rotation (hardware/infra vendors capturing that spend): DELL, HPE, CSCO — but all have already run +40–50% YTD, so they're quality/momentum, not value today.
- On the wrong side (the beaten-down software/services incumbents where the value actually is): OTEX, Kyndryl, DXC — cheaper, but each carries the "why is it cheap?" question.
So "IBM-peer value" forces a real choice: pay up for the infra winners, or dig for value in the repriced software/services names. The genuine value is below.
Ranked Shortlist
| # | Company | Ticker | Field vs IBM | ~Price | Fwd P/E | EV/EBITDA | Gross Mgn | ROIC | Div Yld | Growth | Verdict |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | OpenText | OTEX | Hybrid/enterprise software (≈ IBM Software) | ~$23 | ~6.4x | 3.3x | 72% | 8.6% | ~4.5–5% | Cloud bkgs +15%, organic sluggish | 💎 Deep value + income |
| 2 | Kyndryl | KD | Managed infra services (literally IBM's 2021 spinoff) | ~$12 | ~15x | ~low | 22% | 5.1% | 0% | Turnaround, margins inflecting | 🟢 Turnaround value |
| 3 | HPE | HPE | Hybrid-cloud infra + networking + svcs | ~$49 | ~11x | mid | ~33% | mod | ~1.3% | Rev +18% (Juniper), FCF turned + | 🔵 Infra winner, ran up |
| 4 | Cisco | CSCO | Networking + software + dividend (mature) | ~$118 | ~17x | ~15x | ~65% | high | ~2.4% | Rec. rev +12%, $9B AI orders | 🔵 Quality, no longer cheap |
| 5 | DXC Tech | DXC | IT services (≈ IBM Consulting, low end) | ~$8.85 | ~6x | low | ~low | low | 0% | Rev −4.8%, bookings −6% | ⚠️ Value-trap risk |
| 6 | Infosys | INFY | IT services (cheaper than your ACN) | ~$11.3 | ~18x | — | ~30% | high | ~2.5% | Low-single-digit, AI-svcs overhang | 🟡 Correlated w/ your ACN/EPAM |
(Also scanned, cut: DELL ~$459 — the purest "servers/storage/memory" beneficiary IBM cited, but ran to the moon, no margin of safety; HPQ ~$25 — PC/print, ex-growth; WIT ~$1.9 / NOK ~$12 / ERIC ~$11 — shrinking or structurally challenged, cheap-for-a-reason.)
The two that actually clear the value bar
1. OpenText (OTEX) — 💎 the cheapest genuine IBM-software analog
The closest thing to "IBM's Software segment as a standalone value stock." Enterprise Information Management + content/security/cloud — sticky, high-switching-cost enterprise plumbing, sold into the same regulated-enterprise base IBM serves. - The valuation is the thesis: EV/EBITDA 3.3x, EV/Sales 1.1x, fwd P/E ~6.4x, 72% gross margin, 32% EBITDA margin, real FCF, and a ~4.5–5% dividend (62% payout). It has fallen further since fiscal year-end ($29 → ~$23), so it's cheaper than the ratios above. - Why it's cheap (be honest): acquisitive (Micro Focus digestion), carries leverage, organic growth is sluggish and ROIC is only ~8.6% — this is value, not a compounder. The question is exactly IBM's: is flat-ish organic a pause or a ceiling? But at 3.3x EBITDA with a 5% yield, the market is pricing permanent stagnation — low bar to clear. - Fit: differentiated from your book, and the fat dividend suits the growth→income transition. Best single answer to "cheap in IBM's field."
2. Kyndryl (KD) — 🟢 the poetic turnaround: IBM's own castoff
Kyndryl is the low-margin managed-infrastructure-services business IBM spun off in Nov 2021 to become higher-margin. Buying KD is buying the "old IBM" at a turnaround price. - The turnaround is real: op margin 3.7% → 4.2%, EBITDA margin 10.4% → 11.3%, adjusted EPS $1.19 → $1.46 (+23%), FCF ~$406M. Multiple DCFs peg it 36–64% undervalued at ~$12; trades ~15x P/E vs. a services-industry ~20–28x. - The catch: structurally thin margins (22% gross, 1.3% net), ROIC only ~5%, no dividend, and it's still the commodity-services layer AI most threatens. This is a turnaround, size it as one — not a quality hold.
Watch, don't chase / avoid
- HPE / CSCO / DELL — the rotation winners, but HPE +42% and CSCO +50% YTD (May) and DELL parabolic. Great businesses catching the "servers/storage/memory/networking" wave IBM pointed at — put HPE on watch with an entry well below ~$49 and wait for a semi/infra-capex wobble. No value cushion today.
- DXC (⚠️ value-trap): optically ~6x earnings, $713M FCF, but revenue −4.8% organic and bookings −6% — melting-ice-cube IT services. Cheap because it's shrinking. Avoid unless a hard catalyst appears.
- INFY / WIT (correlated): Indian IT services are cheaper than your ACN, but they sit in the exact AI-services-disruption bucket already hurting your ACN (−36%), EPAM (−77%), and watched CTSH. Adding here doubles down on a bet you're already heavy in — skip.
Portfolio-fit lens (important)
You are already deep in the IT-services-disruption theme (ACN, EPAM held; CTSH watched) — the very theme that detonated today. So the services-flavored IBM-peers (KD, DXC, INFY) add correlated risk, not diversification. The two names that are genuinely differentiated from what you hold: - OTEX — enterprise software/info-management + a 5% dividend → fits the income tilt, low correlation to your existing pain. - HPE (on a pullback) — hardware/infra on the right side of the rotation → genuine diversification from your software-heavy book.
Next steps
Add to Watchlist? Recommendation:
- OTEX → Technology (Enterprise Software), WATCH — deep-value + ~5% yield. Priority /analyze to resolve the organic-growth-vs-leverage question and set an entry zone. My #1 pick from this screen.
- KD → Technology (IT Services), WATCH — turnaround; /analyze (or /analyze-smallcap lens on the turnaround) before any capital.
- HPE → Infrastructure, WATCH — quality infra beneficiary; entry target below ~$45, wait for pullback.
Say which to add, and I'd /analyze OTEX first — it's the one where a full pipeline most changes the decision.
Data: roic.ai (OTEX/KD margins, ROIC, multiples), web research (HPE/CSCO/DELL/DXC/KD valuations & growth), live Public.com quotes (after-hours, approximate). Screen-tier health check — valuations as of 2026-07-14.