Is International Business Machines Stock’s 29% Drop A Bargain?
International Business Machines (IBM) stock has fallen by 28.6% in less than a month, from $312.95 on 2nd Feb, 2026 to $223.35 now. Should you buy this dip?
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, IBM stock passes basic quality checks There is only one past instance where it dipped sharply, and returned 37% during the subsequent 12-month period, with peak return reaching 42%. We define sharp dip as stock going down 30% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
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| Period | Past Median Return |
|---|---|
| 1M | 19.8% |
| 3M | 24.4% |
| 6M | 26.5% |
| 12M | 36.6% |
Historical Dip-Wise Details
IBM had 1 events since 1/1/2010 where the dip threshold of -30% within 30 days was triggered
- 42% median peak return within 1 year of dip event
- 84 days is the median time to peak return after a dip event
- -4.4% median max drawdown within 1 year of dip event
| 30 Day Dip | IBM Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | IBM | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 37% | 42% | -4% | 84 | ||||
| 3162020 | -30% | -25% | 37% | 42% | -4% | 84 | ||
International Business Machines Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 4.5% | Pass |
| Revenue Growth (3-Yr Avg) | 2.6% | Fail |
| Operating Cash Flow Margin (LTM) | 20.6% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | 6.0 | |
| => Cash To Interest Expense Ratio | 7.9 |
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