Kyndryl Stock To $8?
Kyndryl (KD) stock has fallen 55% during the past day, and is currently trading at $10.59. Our multi-factor assessment suggests that it may be time to sell KD stock. We have, overall, a pessimistic view of the stock, and a price of $8 may not be out of reach. We believe there is a lot to fear in KD stock given its overall Very Weak operating performance and financial condition. Hence, despite its Very Low valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very Low |
| What you get: | |
| Growth | Very Weak |
| Profitability | Very Weak |
| Financial Stability | Moderate |
| Downturn Resilience | Very Weak |
| Operating Performance | Very Weak |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $2.4 Bil in market cap, Kyndryl provides global IT infrastructure and technology services, including cloud, enterprise, application, data, and AI solutions for financial, telecommunications, retail, automobile, and transportation sectors.
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[1] Valuation Looks Very Low
| KD | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 0.2 | 3.4 |
| Price-to-Earnings Ratio | 6.0 | 24.8 |
| Price-to-Free Cash Flow Ratio | 10.1 | 21.6 |
This table highlights how KD is valued vs broader market. For more details see: KD Valuation Ratios
[2] Growth Is Very Weak
- Kyndryl has seen its top line shrink at an average rate of -5.1% over the last 3 years
- Its revenues have fallen -1.9% from $15 Bil to $15 Bil in the last 12 months
- Also, its quarterly revenues declined -1.4% to $3.7 Bil in the most recent quarter from $3.8 Bil a year ago.
| KD | S&P 500 | |
|---|---|---|
| 3-Year Average | -5.1% | 5.6% |
| Latest Twelve Months* | -1.9% | 6.4% |
| Most Recent Quarter (YoY)* | -1.4% | 7.4% |
This table highlights how KD is growing vs broader market. For more details see: KD Revenue Comparison
[3] Profitability Appears Very Weak
- KD last 12 month operating income was $593 Mil representing operating margin of 4.0%
- With cash flow margin of 5.8%, it generated nearly $863 Mil in operating cash flow over this period
- For the same period, KD generated nearly $408 Mil in net income, suggesting net margin of about 2.7%
| KD | S&P 500 | |
|---|---|---|
| Current Operating Margin | 4.0% | 18.8% |
| Current OCF Margin | 5.8% | 20.6% |
| Current Net Income Margin | 2.7% | 12.8% |
This table highlights how KD profitability vs broader market. For more details see: KD Operating Income Comparison
[4] Financial Stability Looks Moderate
- KD Debt was $4.0 Bil at the end of the most recent quarter, while its current Market Cap is $2.4 Bil. This implies Debt-to-Equity Ratio of 165.3%
- KD Cash (including cash equivalents) makes up $1.3 Bil of $11 Bil in total Assets. This yields a Cash-to-Assets Ratio of 11.8%
| KD | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 165.3% | 19.7% |
| Current Cash-to-Assets Ratio | 11.8% | 7.4% |
[5] Downturn Resilience Is Very Weak
KD has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- KD stock fell 79.8% from a high of $40.75 on 22 October 2021 to $8.23 on 14 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 February 2025
- Since then, the stock increased to a high of $43.45 on 5 February 2025 , and currently trades at $10.59
| KD | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -79.8% | -25.4% |
| Time to Full Recovery | 845 days | 464 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read KD Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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