Is This What It Looks Like When A Mega-Cap Has Nowhere Left To Grow?

The graphs below were produced by Capital Market Labs.

Over the last four years, International Business Machines Corp. IBM stock has been essentially unchanged...and so has cash from operations, investment in research & development and generated net income.

In fact, the only earnings effort that seems to be working is simply tax management.

Is this what it looks like when a mega cap IT firm has nowhere left to grow?

Revenue (TTM) Vs. Net Income (TTM)

Over the long run, there has been a very nice increase in net income for IBM (the red line), but in the last four years, there's been zero growth from endpoint-to-endpoint.

Net Income (TTM) Vs. Effective Tax Rate

The only real strategy that IBM seems to be implementing successfully is lowering its tax bill from 35 percent to 15 percent. Now that the tax management strategy may have peaked, it appears so have earnings.

Cash From Operations (TTM)

Over the last four years, cash from operations are actually down.

Cash From Operations Vs. Stock Price

This is the same data, but the orange line is the stock price. Total stagnation can be seen.

Research & Development Vs. Stock Price

This is perhaps the most disheartening of all the images: IBM hasn't spent a single dollar more on R&D as its stock price has not participated in the bull rally...at all.

Ophir Gottlieb can be found on Twitter @ophirgottlieb.

Image credit: Marcin Wichary, Flickr