IBM Shares Break Below 52-Week Lows: A Technical Look

International Business Machines Corp. IBM shares have been a disappointment on a relative and real return basis for years, but perhaps never more than in 2014. The stock just hit new 52-week lows even as the market (until very recently) was routinely setting new highs.

Can the company's management right the ship and get "Big Blue" headed in the right direction? Let's take a look at the state of IBM right now.

What The Bulls See

• A 2.7 percent annual dividend and only a 34 percent payout ratio, indicating there is plenty of room to grow that dividend.
• A current ratio of 1.12.
• 13.06 percent net profit margins that spinoff over $10.66 billion in positive levered free cash flow annually.
• Cheap valuation metrics: An enterprise value of $195 billion vs. a market capitalization of $156 billion and a price-to-sales ratio of 1.64.
• Clean balance sheet metrics: A debt-to-equity ratio of 68.62 percent and a current ratio of 1.16.

Related Link: Analysts: FireEye Inc. Buyout Rumor Is Plausible

What The Bears See

• A big, debt-laden company as evidenced by the 317 percent debt-to-equity ratio.
• Expensive valuation metrics: A PE of 9 which doesn't seem so cheap when compared to estimated 2015 revenue and EPS growth of -4.4 percent and 4.3 percent, respectively, and a price-to-book ratio of 11.18.

The Technical Take

Technicians note that while it is never bullish to see a stock breaking to new 52-week lows, IBM actually has more important "correction support" for a very macro ABC formation at $156.04 –- just below Friday afternoon's prices. If that level is broken, especially on a monthly closing basis, all bullish bets are "off." If that level can hold up as support, however, the stock may have a chance to turn things around technically.

If the stock holds above that support, for whatever fundamental reasons that may come about, it may have a chance to trade back up towards the all-time highs at around $220 and possibly higher.

A turn in business, activist investors and any number of other factors could provide the impetus for a positive change in price direction.