Is IBM One of the Best Companies in America?

In partnership with Glassdoor, our investment analysts are taking a closer look at some of the most popular companies in Glassdoor's career community. 

IBM (IBM 0.06%) remains a household name in technology even after spinning off or selling many of its consumer-facing businesses. In fact, Big Blue took No. 4 in Interbrand's 2013 listing of Best Global Brands, putting it just behind Apple, Google, and Coca-Cola.

However, despite IBM being an extremely profitable company, the investment community isn't too hot on the stock: shares trade at just over 12 times trailing 12-month earnings. One widely held explanation for IBM's submarket multiple is that the company is having a difficult time reigniting revenue growth.

Nevertheless, with a powerful brand and nearly $100 billion in revenue last year, it's worth asking if IBM is one of America's best companies.

IBM's performance as an investment requires perspective
Year to date, IBM shares are up just 2.26%, while the S&P 500 has risen 7.35%. Over the last year, IBM is actually down 0.19% against an S&P that has soared 17.53%.

IBM investors who got in fairly recently probably aren't all that happy with the performance in the share price. But that doesn't mean IBM isn't trying to make its stock as appealing as possible. In October 2013, the company announced that its board of directors had added another $15 billion to its share repurchase program, raising the total authorization at the time to $20.6 billion. The press release also noted the company "expects to request additional share repurchase authorization at the October 2014 board meeting."

IBM has also made it clear that it wants to continue to drive earnings-per-share growth despite a difficult revenue growth story via cost-cutting, share repurchases, and a shift to higher-margin businesses. The good news is that IBM has a pretty good shot of reaching its sought-after $20 per share in 2015 earnings; however, absent meaningful revenue growth, the company's stock might continue to trade for a low earnings multiple.

Still, keep in mind that growing sales off of a nearly $100 billion baseline isn't exactly a walk in the park.

Are "IBMers" happy?
According to Glassdoor, out of 11,562 respondents, IBM received an overall average rating of 3.1 out of five stars. Fifty-four percent of respondents would recommend the company to a friend, while only 50% of 3,553 respondents approve of CEO Virginia Rometty.

Let's look more closely at the breakdown of the ratings:

Source: Glassdoor.

With these numbers in mind, let's look at some comments from the respondents and see how they fit within the broader context of these ratings.

One comment that particularly stuck out was from a current employee working in supply chain management. The employee offered the following advice to management, suggesting the potential long-term sacrifice that comes with IBM's $20 EPS target: "Need to understand the impact of layoff[s]. A lot of knowledge leaves with the employee."

A current advisory software engineer cited a similar concern: "Trying to do too much with too little. Understaffed. Often trying to catch up with technology."

Turning toward the more positive comments, 595 reviewers indicated they found the work environments "flexible."

In fact, of the five most touched upon positive reviews highlights, three praised the company's work/life balance. This, unsurprisingly, correlates well with the numerical rating.

Overall, the general "flavor" these reviews give is that IBM has a solid work/life balance but that the company's focus on growing profits through cost-cutting is proving frustrating for some employees.

IBM's indirect consumer impact
Much of IBM's business isn't particularly aimed at individual consumers. While a company such as Facebook offers a social network for just about everybody, IBM provides what it calls "social workforce solutions," which are essentially business-oriented social networking solutions.

IBM's software is also very business-centric. For example, it builds "mobile software" (as the recent deal that IBM and Apple inked suggests). The focus of this software is, according to IBM, to leverage "powerful analytics and usage data" in order to allow its customers "have more compelling interactions with their clients and workforce."

Additionally, IBM pointed out in its annual report that it has a "rapidly growing roster of 30,000 client engagements," including partnerships with Honda and "hundreds of top online games with a user base exceeding 100 million."

While IBM's products aren't all that consumer-facing, it looks as though these products have a positive impact on many large organizations, which, in turn, helps those organizations better service customers.

How about the broader world?
IBM, like many other large tech companies, appears to put a lot of effort into "green" practices. IBM claims that between 1990 and 2012, it "saved 6.1 billion kWh of electricity consumption, avoided 3.9 million metric tons of CO2 emissions, and saved $477 million through its annual energy conservation actions."

The company also has a "product stewardship" program in place that is aimed at making its products more environmentally friendly. The company claims that it designs its products with "consideration for their upgradeability to extend product life," and aims to make sure its products can be safely disposed of at the end of their lives.

IBM also aims to improve the energy efficiency of its products, and will try to use recycled materials "where they are technically and economically" justifiable.

Foolish takeaway
Make no mistake: IBM is an incredibly powerful and financially sound company with plenty going for it. However, like any other company, it faces its share of challenges. Going forward, it'll be interesting to see whether the company can get the revenue growth engine started up again, and if IBM will address any of the internal issues mentioned by current employees.