Critical Review: International Business Machines (NYSE:IBM) and Allbirds (NASDAQ:BIRD)

International Business Machines (NYSE:IBM) and Allbirds (NASDAQ:BIRD) are both technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and price targets for International Business Machines and Allbirds, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Business Machines	2	12	18	0	2.50
Allbirds	1	1	0	0	1.50

International Business Machines currently has a consensus target price of $253.52, indicating a potential upside of 13.92%. Given International Business Machines’ stronger consensus rating and higher possible upside, analysts clearly believe International Business Machines is more favorable than Allbirds.

Insider and Institutional Ownership

59.0% of International Business Machines shares are owned by institutional investors. Comparatively, 44.1% of Allbirds shares are owned by institutional investors. 0.3% of International Business Machines shares are owned by insiders. Comparatively, 18.8% of Allbirds shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares International Business Machines and Allbirds’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Business Machines	15.52%	35.65%	7.54%
Allbirds	-72.82%	-231.86%	-81.53%

Valuation and Earnings

This table compares International Business Machines and Allbirds”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Business Machines	$69.10 billion	3.03	$10.59 billion	$11.27	19.75
Allbirds	$152.47 million	0.19	-$77.28 million	($8.99)	-0.37

International Business Machines has higher revenue and earnings than Allbirds. Allbirds is trading at a lower price-to-earnings ratio than International Business Machines, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

International Business Machines has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Allbirds has a beta of 2.6, indicating that its stock price is 160% more volatile than the S&P 500.

Summary

International Business Machines beats Allbirds on 12 of the 14 factors compared between the two stocks.

About International Business Machines

International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. The company operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry. The Infrastructure segment provides on-premises and cloud based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment. The Financing segment offers client and commercial financing, facilitates IBM clients’ acquisition of hardware, software, and services. The company has a strategic partnership to various companies including hyperscalers, service providers, global system integrators, and software and hardware vendors that includes Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.

About Allbirds

Allbirds, Inc. manufactures and sells footwear and apparel products for men and women in the United States and internationally. The company offers a range of lifestyle and performance shoes; and apparel, including classic tees and sweats, socks, and underwear. It sells its products through its retail stores, as well as online. The company was formerly known as Bozz, Inc. and changed its name to Allbirds, Inc. in December 2015. Allbirds, Inc. was incorporated in 2015 and is headquartered in San Francisco, California.