In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue came from overseas. Today, more than half of the S&P 500's growth comes from overseas.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations who have already established presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at IBM (NYSE: IBM ) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.
Where IBM's sales are today
Today, IBM collects 36% of its sales from its home market in the Americas. The chart below breaks down IBM's sales by geography.
Source: Capital IQ, a division of Standard & Poor's.
Where IBM's sales were five years ago
Five years ago, IBM collected a modestly higher 38% of sales from the Americas. Sales to both the Americas and Japan were outpaced by stronger International growth.
Source: Capital IQ, a division of Standard & Poor's.
As I've highlighted on recent earnings write-ups on the company, IBM has repeatedly been quick to note outsized growth in BRIC countries. While IBM has focused on growing profitability while divesting more capital intensive businesses in recent years, BRIC countries could provide a powerful top-line driver in the coming years while IBM puts more focus on continuing margin improvement in more developed countries.
Competitor checkup
One last point to check is how IBM's footprint compares to some of its peers across the broader technology industry:
|
Company
|
Geographic Area With Most Sales
|
Percent of Sales
|
| IBM |
Americas |
36% |
| Accenture (NYSE: ACN ) |
Americas |
44% |
| Oracle (Nasdaq: ORCL ) |
Americas |
52% |
| Cognizant Technology Solutions (Nasdaq: CTSH ) |
North America |
78% |
Source: Capital IQ, a division of Standard & Poor's.
When it comes to far-reaching geographic reach, Big Blue is unmatched. Investors looking to focus more on the BRIC aspect of outsourced solutions could look to Wipro (NYSE: WIT ) , a company that derives 22% of its sales from India. However, with strong emerging market exposure comes higher multiples. Wipro trades for about 20 times earnings while IBM can be fetched trading below 14 times earnings.
Keep searching
If you're looking to stay updated on IBM or any of the other companies listed above, make sure to add them to our free watchlist service, My Watchlist. It's free, and it helps you constantly stay updated on news and analysis on your favorite companies.
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