Intel Corporation Valuation – April 2019 #INTC

Company Profile (excerpt from Reuters): Intel Corporation, incorporated on March 1, 1989, is engaged in designing and manufacturing products and technologies, such as the cloud. The Company’s segments are Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Intel Security Group (ISecG), Programmable Solutions Group (PSG), All Other and New Technology Group (NTG). The Company delivers computer, networking and communications platforms to a set of customers, including original equipment manufacturers (OEMs), original design manufacturers (ODMs), cloud and communications service providers, as well as industrial, communications and automotive equipment manufacturers. It offers platforms to integrate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. Its platforms are managed by additional hardware, software and services offered by Intel.

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – April 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $249,631,094,870 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.73 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 61.87% Pass
6. Moderate PEmg Ratio PEmg < 20 16.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.42 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.73 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.06 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago PassModernGraham Valuation of INTC – April 2019

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.40
MG Growth Estimate 8.02%
MG Value $83.35
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $49.26
MG Value based on 0% Growth $28.88
Market Implied Growth Rate 3.91%
Current Price $55.45
% of Intrinsic Value 66.53%

Intel Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.21 in 2015 to an estimated $3.4 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.91% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Intel Corporation revealed the company was trading above its Graham Number of $39.14. The company pays a dividend of $1.2 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.32, which was below the industry average of 35.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.24.

Intel Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.24
Graham Number $39.14
PEmg 16.32
Current Ratio 1.73
PB Ratio 3.42
Current Dividend $1.20
Dividend Yield 2.16%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $28,787,000,000
Total Current Liabilities $16,626,000,000
Long-Term Debt $25,098,000,000
Total Assets $127,963,000,000
Intangible Assets $36,349,000,000
Total Liabilities $52,981,000,000
Shares Outstanding (Diluted Average) 4,620,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Dec2018 $4.48
Dec2017 $1.99
Dec2016 $2.12
Dec2015 $2.33
Dec2014 $2.31
Dec2013 $1.89
Dec2012 $2.13
Dec2011 $2.39
Dec2010 $2.01
Dec2009 $0.77
Dec2008 $0.92
Dec2007 $1.18
Dec2006 $0.86
Dec2005 $1.40
Dec2004 $1.16
Dec2003 $0.85
Dec2002 $0.46
Dec2001 $0.19
Dec2000 $1.51
Dec1999 $1.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.40
Dec2018 $2.91
Dec2017 $2.13
Dec2016 $2.18
Dec2015 $2.21
Dec2014 $2.15
Dec2013 $2.00
Dec2012 $1.91
Dec2011 $1.69
Dec2010 $1.27
Dec2009 $0.95
Dec2008 $1.06
Dec2007 $1.11
Dec2006 $1.04
Dec2005 $1.02
Dec2004 $0.83
Dec2003 $0.72

Recommended Reading:

Other ModernGraham posts about the company

Intel Corp Valuation – November 2018 $INTC
Intel Corp Valuation – February 2018 $INTC
5 Overvalued Dow Components – July 2016
Intel Corporation Valuation – May 2016 $INTC
11 Best Stocks For Value Investors This Week – 11/21/15

Other ModernGraham posts about related companies

Apple Inc Valuation – April 2019 #AAPL
Arista Networks Inc Valuation – April 2019 #ANET
Maxim Integrated Products Inc Valuation – April 2019 #MXIM
Keysight Technologies Inc Valuation – April 2019 #KEYS
Lam Research Corp Valuation – April 2019 #LRCX
Emerson Electric Co Valuation – April 2019 #EMR
Skyworks Solutions Inc Valuation – March 2019 #SWKS
Garmin Ltd Valuation – March 2019 #GRMN
Hewlett Packard Enterprise Co Valuation – March 2019 #HPE
Fortive Corp Valuation – March 2019 #FTV

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Intel Corp Valuation – November 2018 $INTC

Company Profile (excerpt from Reuters): Intel Corporation, incorporated on March 1, 1989, is engaged in designing and manufacturing products and technologies, such as the cloud. The Company’s segments are Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Intel Security Group (ISecG), Programmable Solutions Group (PSG), All Other and New Technology Group (NTG). The Company delivers computer, networking and communications platforms to a set of customers, including original equipment manufacturers (OEMs), original design manufacturers (ODMs), cloud and communications service providers, as well as industrial, communications and automotive equipment manufacturers. It offers platforms to integrate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. Its platforms are managed by additional hardware, software and services offered by Intel.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $222,860,087,779 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.51 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 67.70% Pass
6. Moderate PEmg Ratio PEmg < 20 16.61 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.18 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.51 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.53 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.94
MG Growth Estimate 5.48%
MG Value $57.21
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $42.62
MG Value based on 0% Growth $24.98
Market Implied Growth Rate 4.06%
Current Price $48.83
% of Intrinsic Value 85.35%

Intel Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.15 in 2014 to an estimated $2.94 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Intel Corporation revealed the company was trading above its Graham Number of $38.87. The company pays a dividend of $1.08 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.61, which was below the industry average of 36.27, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.85.

Intel Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.85
Graham Number $38.87
PEmg 16.61
Current Ratio 1.51
PB Ratio 3.18
Current Dividend $1.08
Dividend Yield 2.21%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $29,590,000,000
Total Current Liabilities $19,574,000,000
Long-Term Debt $25,338,000,000
Total Assets $128,242,000,000
Intangible Assets $36,513,000,000
Total Liabilities $56,759,000,000
Shares Outstanding (Diluted Average) 4,648,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.56
Dec2017 $1.99
Dec2016 $2.12
Dec2015 $2.33
Dec2014 $2.31
Dec2013 $1.89
Dec2012 $2.13
Dec2011 $2.39
Dec2010 $2.01
Dec2009 $0.77
Dec2008 $0.92
Dec2007 $1.18
Dec2006 $0.86
Dec2005 $1.40
Dec2004 $1.16
Dec2003 $0.85
Dec2002 $0.46
Dec2001 $0.19
Dec2000 $1.51
Dec1999 $1.05
Dec1998 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.94
Dec2017 $2.13
Dec2016 $2.18
Dec2015 $2.21
Dec2014 $2.15
Dec2013 $2.00
Dec2012 $1.91
Dec2011 $1.69
Dec2010 $1.27
Dec2009 $0.95
Dec2008 $1.06
Dec2007 $1.11
Dec2006 $1.04
Dec2005 $1.02
Dec2004 $0.83
Dec2003 $0.72
Dec2002 $0.70

Recommended Reading:

Other ModernGraham posts about the company

Intel Corp Valuation – February 2018 $INTC
5 Overvalued Dow Components – July 2016
Intel Corporation Valuation – May 2016 $INTC
11 Best Stocks For Value Investors This Week – 11/21/15
Intel Corp Valuation – November 2015 Update $INTC

Other ModernGraham posts about related companies

Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY
Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Intel Corp Valuation – February 2018 $INTC

Company Profile (obtained from Marketwatch): Intel Corp. engages in the design, manufacture, and sale of computer products and technologies. It delivers computer, networking, and communications platforms. It operates its business through the following segments: Client Computing Group, Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, Intel Security Group, Programmable Solutions, and All Other. The Client Computing Group segment consists of platforms designed for notebooks, 2 in 1 systems, desktops, tablets, phones, wireless and wired connectivity products, and mobile communication components. The Data Center Group segment includes workload-optimized platforms and related products designed for enterprise, cloud, and communication infrastructure market. The Internet of Things Group segment comprises of platforms such as retail, transportation, industrial, video, buildings and smart cities, along with a broad range of other market segments. The Non-Volatile Memory Solutions Group segment constitutes of NAND flash memory products primarily used in solid-state drives. The Intel Security Group segment composes of security software products designed to deliver innovative solutions that secure computers, mobile devices, and networks. The Programmable Solutions Group segment contains programmable semiconductors and related products for a broad range of markets, including communications, data center, industrial, military, and automotive. The All Other segment consist of results from other non-reportable segment and corporate-related charges. The company was founded by Robert Norton Noyce and Gordon Earle Moore on July 18, 1968 and is headquartered in Santa Clara, CA.

INTC Chart

INTC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – February 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $232,192,483,121 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 42.55% Pass
6. Moderate PEmg Ratio PEmg < 20 19.05 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.31 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.51
MG Growth Estimate 2.46%
MG Value $33.64
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $36.34
MG Value based on 0% Growth $21.30
Market Implied Growth Rate 5.27%
Current Price $47.73
% of Intrinsic Value 141.88%

Intel Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.15 in 2014 to an estimated $2.51 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.27% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Intel Corporation revealed the company was trading above its Graham Number of $32.89. The company pays a dividend of $1.08 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.05, which was below the industry average of 41.95, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.16.

Intel Corporation receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.16
Graham Number $32.89
PEmg 19.05
Current Ratio 1.69
PB Ratio 3.31
Current Dividend $1.08
Dividend Yield 2.26%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $29,500,000,000
Total Current Liabilities $17,421,000,000
Long-Term Debt $25,037,000,000
Total Assets $123,249,000,000
Intangible Assets $37,134,000,000
Total Liabilities $54,230,000,000
Shares Outstanding (Diluted Average) 4,793,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.26
Dec2017 $1.99
Dec2016 $2.12
Dec2015 $2.33
Dec2014 $2.31
Dec2013 $1.89
Dec2012 $2.13
Dec2011 $2.39
Dec2010 $2.01
Dec2009 $0.77
Dec2008 $0.92
Dec2007 $1.18
Dec2006 $0.86
Dec2005 $1.40
Dec2004 $1.16
Dec2003 $0.85
Dec2002 $0.46
Dec2001 $0.19
Dec2000 $1.51
Dec1999 $1.05
Dec1998 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.51
Dec2017 $2.13
Dec2016 $2.18
Dec2015 $2.21
Dec2014 $2.15
Dec2013 $2.00
Dec2012 $1.91
Dec2011 $1.69
Dec2010 $1.27
Dec2009 $0.95
Dec2008 $1.06
Dec2007 $1.11
Dec2006 $1.04
Dec2005 $1.02
Dec2004 $0.83
Dec2003 $0.72
Dec2002 $0.70

Recommended Reading:

Other ModernGraham posts about the company

11 Best Stocks For Value Investors This Week – 11/21/15
Intel Corp Valuation – November 2015 Update $INTC
The Best Stocks of the IT Hardware Industry – September 2015
15 Best Stocks For Value Investors This Week – 8/22/15
Intel Corporation Analysis – August 2015 Update $INTC

Other ModernGraham posts about related companies

Apple Inc Valuation – February 2018 $AAPL
Lam Research Corp Valuation – September 2017 $LRCX
Vicor Corp Valuation – Initial Coverage $VICR
Emerson Electric Co Valuation – August 2017 $EMR
General Cable Corporation Valuation – Initial Coverage $BGC
3D Systems Corp Valuation – Initial Coverage $DDD
Teradyne Inc Valuation – Initial Coverage $TER
Diebold Nixdorf Inc Valuation – Initial Coverage $DBD
Tech Data Corp Valuation – Initial Coverage $TECD
Teledyne Technologies Inc Valuation – Initial Coverage $TDY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Intel Corporation Valuation – May 2016 $INTC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Intel Corporation (INTC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Intel Corporation is engaged in the design and manufacture of digital technology platforms. The Company’s segments include Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Software and Services (SSG) and All Other. CCG segment includes platforms designed for notebooks (including Ultrabook devices), 2 in 1 systems, desktops (including all-in-ones and personal computers (PCs)), tablets, phones, wireless and wired connectivity products, and mobile communication components. DCG segment includes server, network and storage platforms designed for the enterprise, cloud, communications infrastructure and technical computing segments. IOTG segment includes platforms designed for Internet of Things market segments, including retail, transportation, industrial, and buildings and home use. SSG segment includes Intel Security Group, and Software and Services group. All Other segment includes Non-Volatile Memory Solutions Group and the New Devices Group.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – May 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $139,702,280,739 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.56 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 132.40% Pass
6. Moderate PEmg Ratio PEmg < 20 13.92 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.39 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.56 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.21 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

INTC value chart May 2016

EPSmg $2.15
MG Growth Estimate 1.89%
MG Value $26.44
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $31.23
MG Value based on 0% Growth $18.31
Market Implied Growth Rate 2.71%
Current Price $29.99
% of Intrinsic Value 113.44%

Intel Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.91 in 2012 to an estimated $2.15 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.71% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Intel Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

INTC charts May 2016

Net Current Asset Value (NCAV) -$3.47
Graham Number $24.32
PEmg 13.92
Current Ratio 1.56
PB Ratio 2.39
Current Dividend $0.98
Dividend Yield 3.27%
Number of Consecutive Years of Dividend Growth 2

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $27,397,000,000
Total Current Liabilities $17,526,000,000
Long-term Debt $21,775,000,000
Total Assets $105,467,000,000
Intangible Assets $28,082,000,000
Total Liabilities $44,293,000,000
Shares Outstanding (Diluted Average) 4,875,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.03
12/1/2015 $2.33
12/1/2014 $2.31
12/1/2013 $1.89
12/1/2012 $2.13
12/1/2011 $2.39
12/1/2010 $2.01
12/1/2009 $0.77
12/1/2008 $0.92
12/1/2007 $1.18
12/1/2006 $0.86
12/1/2005 $1.40
12/1/2004 $1.16
12/1/2003 $0.85
12/1/2002 $0.46
12/1/2001 $0.19
12/1/2000 $1.51
12/1/1999 $1.06
12/1/1998 $0.87
12/1/1997 $0.97
12/1/1996 $0.73

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.15
12/1/2015 $2.21
12/1/2014 $2.15
12/1/2013 $2.00
12/1/2012 $1.91
12/1/2011 $1.69
12/1/2010 $1.27
12/1/2009 $0.95
12/1/2008 $1.06
12/1/2007 $1.11
12/1/2006 $1.04
12/1/2005 $1.02
12/1/2004 $0.83
12/1/2003 $0.72
12/1/2002 $0.70
12/1/2001 $0.86
12/1/2000 $1.14

Recommended Reading:

Other ModernGraham posts about the company

11 Best Stocks For Value Investors This Week – 11/21/15
Intel Corp Valuation – November 2015 Update $INTC
The Best Stocks of the IT Hardware Industry – September 2015
15 Best Stocks For Value Investors This Week – 8/22/15
Intel Corporation Analysis – August 2015 Update $INTC

Other ModernGraham posts about related companies

FLIR Systems Inc Valuation – May 2016 $FLIR
NetApp Inc Valuation – March 2016 $NTAP
Applied Materials Inc Valuation – February 2016 $AMAT
Skyworks Solutions Inc Stock Valuation – February 2016 $SWKS
Analog Devices Inc Stock Valuation – February 2016 $ADI
Garmin Ltd Stock Valuation – February 2016 $GRMN
Emerson Electric Co Valuation – February 2016 $EMR
Applied Materials Inc Valuation – February 2016 $AMAT
Skyworks Solutions Inc Stock Valuation – February 2016 $SWKS
Analog Devices Inc Stock Valuation – February 2016 $ADI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Intel Corp Valuation – November 2015 Update $INTC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Intel Corp (INTC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Intel Corporation is engaged in the design and manufacture of digital technology platforms. The Company sells these platforms to original equipment manufacturers (OEMs), original design manufacturers (ODMs), and industrial and communications equipment manufacturers in the computing and communications industries. The Company’s platforms are used to deliver a range of computing experiences in notebooks, 2 in 1 systems, desktops, servers, tablets, smartphones, and the Internet of Things. It also develops and sells software and services focused on security and technology integration. The Company’s operating segments include the PC Client Group (PCCG), the Data Center Group (DCG), the Internet of Things Group (IOTG), the Mobile and Communications Group (MCG), the software and services (SSG) and all other. SSG segment includes McAfee and software and services group. All Other segment includes Non-Volatile Memory Solutions Group, Netbook Group and New Devices Group.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – November 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $154,240,564,429 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.40 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 116.22% Pass
6. Moderate PEmg Ratio PEmg < 20 15.06 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.79 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.40 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.95 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

INTC value Chart November 2015

EPSmg $2.17
MG Growth Estimate 4.29%
MG Value $37.07
Opinion Fairly Valued
MG Value based on 3% Growth $31.47
MG Value based on 0% Growth $18.45
Market Implied Growth Rate 3.28%
Current Price $32.69
% of Intrinsic Value 88.18%

Intel Corp qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  The company passes all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial condition.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.69 in 2011 to an estimated $2.17 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 3.28% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Intel Corp (INTC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

INTC Charts November 2015

Net Current Asset Value (NCAV) -$1.08
Graham Number $24.38
PEmg 15.06
Current Ratio 2.40
PB Ratio 2.79
Dividend Yield 2.89%
Number of Consecutive Years of Dividend Growth 1

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $36,205,000,000
Total Current Liabilities $15,080,000,000
Long-Term Debt $20,059,000,000
Total Assets $98,552,000,000
Intangible Assets $15,048,000,000
Total Liabilities $41,455,000,000
Shares Outstanding (Diluted Average) 4,876,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.20
Dec14 $2.31
Dec13 $1.89
Dec12 $2.13
Dec11 $2.39
Dec10 $2.01
Dec09 $0.77
Dec08 $0.92
Dec07 $1.18
Dec06 $0.86
Dec05 $1.40
Dec04 $1.16
Dec03 $0.85
Dec02 $0.46
Dec01 $0.19
Dec00 $1.51
Dec99 $1.05
Dec98 $0.87
Dec97 $0.97
Dec96 $0.73
Dec95 $0.51

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.17
Dec14 $2.15
Dec13 $2.00
Dec12 $1.91
Dec11 $1.69
Dec10 $1.27
Dec09 $0.95
Dec08 $1.06
Dec07 $1.11
Dec06 $1.04
Dec05 $1.02
Dec04 $0.83
Dec03 $0.72
Dec02 $0.70
Dec01 $0.86
Dec00 $1.13
Dec99 $0.91

Recommended Reading:

Other ModernGraham posts about the company

The Best Stocks of the IT Hardware Industry – September 2015
15 Best Stocks For Value Investors This Week – 8/22/15
Intel Corporation Analysis – August 2015 Update $INTC
30 Companies in the Spotlight This Week – 5/23/15
Intel Corporation Quarterly Valuation – May 2015 $INTC

Other ModernGraham posts about related companies

FLIR Systems Inc. Valuation – November 2015 Update $FLIR
NVIDIA Corporation Valuation – November 2015 Update $NVDA
FMC Technologies Inc. Valuation – November 2015 Update $FTI
Applied Materials Inc Valuation – November 2015 Update $AMAT
Micron Technology Inc. Valuation – November 2015 Update $MU
Xilinx Inc. Valuation – November 2015 Update $XLNX
Ametek Inc. Valuation – November 2015 Update $AME
Skyworks Solutions Inc. Valuation – October 2015 Update $SWKS
Agilent Technologies Inc. Valuation – October 2015 Update $A
Western Digital Corporation Valuation – October 2015 Update $WDC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Intel Corporation Analysis – August 2015 Update $INTC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Intel Corporation (INTC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Intel Corporation is engaged in the design and manufacture of digital technology platforms. The Company sells these platforms to original equipment manufacturers (OEMs), original design manufacturers (ODMs), and industrial and communications equipment manufacturers in the computing and communications industries. The Company’s platforms are used to deliver a range of computing experiences in notebooks, 2 in 1 systems, desktops, servers, tablets, smartphones, and the Internet of Things. It also develops and sells software and services focused on security and technology integration. The Company’s operating segments include the PC Client Group (PCCG), the Data Center Group (DCG), the Internet of Things Group (IOTG), the Mobile and Communications Group (MCG), the software and services (SSG) and all other. SSG segment includes McAfee and software and services group. All Other segment includes Non-Volatile Memory Solutions Group, Netbook Group and New Devices Group.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – August 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg 2.10
MG Growth Estimate 3.64%
MG Value $33.09
Opinion Fairly Valued
MG Value based on 3% Growth $30.41
MG Value based on 0% Growth $17.83
Market Implied Growth Rate 2.66%
Current Price $29.00
% of Intrinsic Value 87.65%

Intel Corporation qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the low current ratio.  The Enterprising Investor has no initial concerns.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.69 in 2011 to an estimated $2.10 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 2.66% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Intel Corporation (INTC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

INTC charts August 2015

Net Current Asset Value (NCAV) -$1.24
PEmg 13.83
Current Ratio 1.97
PB Ratio 2.47
Dividend Yield 3.21%
Number of Consecutive Years of Dividend Growth 1

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $26,710,000,000
Total Current Liabilities $13,529,000,000
Long-Term Debt $12,116,000,000
Total Assets $90,492,000,000
Intangible Assets $15,263,000,000
Total Liabilities $32,797,000,000
Shares Outstanding (Diluted Average) 4,909,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.98
Dec14 $2.31
Dec13 $1.89
Dec12 $2.13
Dec11 $2.39
Dec10 $2.01
Dec09 $0.77
Dec08 $0.92
Dec07 $1.18
Dec06 $0.86
Dec05 $1.40
Dec04 $1.16
Dec03 $0.85
Dec02 $0.46
Dec01 $0.19
Dec00 $1.51
Dec99 $1.05
Dec98 $0.87
Dec97 $0.97
Dec96 $0.73
Dec95 $0.51

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.10
Dec14 $2.15
Dec13 $2.00
Dec12 $1.91
Dec11 $1.69
Dec10 $1.27
Dec09 $0.95
Dec08 $1.06
Dec07 $1.11
Dec06 $1.04
Dec05 $1.02
Dec04 $0.83
Dec03 $0.72
Dec02 $0.70
Dec01 $0.86
Dec00 $1.13
Dec99 $0.91

Recommended Reading:

Other ModernGraham posts about the company

30 Companies in the Spotlight This Week – 5/23/15
Intel Corporation Quarterly Valuation – May 2015 $INTC
5 Undervalued Dow Components to Research – May 2015
5 Undervalued Dow Components to Research – April 2015
5 Undervalued Dow Components to Research – March 2015

Other ModernGraham posts about related companies

Advanced Micro Devices Inc. Analysis – Initial Coverage $AMD
Nvidia Corporation Analysis – August 2015 Update $NVDA
Applied Materials Inc. Analysis – August 2015 Update $AMAT
Xilinx Inc. Analysis – August 2015 Update $XLNX
Qorvo Inc. Analysis – Initial Coverage $QRVO
Agilent Technologies Inc. Analysis – July 2015 Update $A
Skyworks Solutions Inc. Analysis – Initial Coverage $SWKS
Western Digital Corporation Analysis – July 2015 Update $WDC
MTS Systems Corporation Analysis – July 2015 Update $MTSC
Linear Technology Corporation Analysis – July 2015 Update $LLTC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.

Intel Corporation Quarterly Valuation – May 2015 $INTC

500px-Intel-logo.svgIntel Corporation (INTC) may attract some potential investors, as the company is so well known for its products. In addition, the company reportedly recently offered to buy Altera (ALTR) in an expansion bid, and may be moving to expand its market share in China. These developments, along with the company’s strong earnings, may play a role in a historically low level of short-interest in the company. However, despite all of these qualitative factors, it is critical to conduct a quantitative analysis of the company’s intrinsic value.

In fact, Benjamin Graham, the father of value investing, taught that the most important aspect to consider is whether a company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here is a look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham, and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation, in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using the ModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

INTC Chart

INTC data by YCharts

Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – FAIL
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) Ratio – PEmg is less than 20 – PASS
  7. Moderate Price-to-Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings Growth – EPSmg greater than that 5 years ago – PASS

Valuation Summary

Key Data

Recent Price $33.12
MG Value $32.91
MG Opinion Fairly Valued
Value Based on 3% Growth $30.36
Value Based on 0% Growth $17.80
Market Implied Growth Rate 3.66%
NCAV -$1.66
PEmg 15.82
Current Ratio 1.76
PB Ratio 2.96

Balance Sheet – March 2015

Current Assets $26,466,000,000
Current Liabilities $15,035,000,000
Total Debt $12,112,000,000
Total Assets $89,566,000,000
Intangible Assets $14,977,000,000
Total Liabilities $34,642,000,000
Outstanding Shares 4,914,000,000

Earnings Per Share

2015 (estimate) $1.97
2014 $2.31
2013 $1.89
2012 $2.13
2011 $2.39
2010 $2.01
2009 $0.77
2008 $0.92
2007 $1.18
2006 $0.86
2005 $1.40

Earnings Per Share – ModernGraham

2015 (estimate) $2.09
2014 $2.15
2013 $2.00
2012 $1.91
2011 $1.69
2010 $1.27

Dividend History

INTC Dividend Chart

INTC Dividend data by YCharts

Conclusion

Intel Corporation passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The Defensive Investor’s only initial concern is the low current ratio, and the Enterprising Investor has no initial concerns. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, Intel has grown its EPSmg (normalized earnings) from $1.69 in 2011 to an estimated $2.09 for 2015. This is not a healthy level of earnings growth, and supports the market’s implied estimate for 3.66% annual growth over the next 7-10 years.

In fact, the average earnings growth over the last several years is around 4.8%, so the market is pricing in a slight drop in growth going forward. The ModernGraham valuation model returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating that Intel is fairly valued at the present time.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Intel Corporation Quarterly Valuation – February 2015 $INTC

500px-Intel-logo.svg

Intel Corporation passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The only issue the Defensive Investor has with the company is the low current ratio, while the Enterprising Investor has no initial concerns. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, Intel Corporation has grown its EPSmg (normalized earnings) from $1.27 in 2010 to $2.15 for 2014. This is a very strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 3.74% over the next 7-10 years. In fact, the historical growth is around 13.79% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Intel Corporation (INTC) for greater perspective!

Read the full valuation on Seeking Alpha!

INTC Chart

INTC data by YCharts

Disclaimer:  The author did not hold a position in Intel Corporation (INTC) at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Intel Corporation Quarterly Valuation – November 2014 $INTC

500px-Intel-logo.svg

Intel Corporation passes the initial requirements of the Enterprising Investor, but does not quite qualify for the Defensive Investor. The Defensive Investor is concerned with the low current ratio along with the high PB ratio, while the Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $1.27 in 2010 to an estimated $2.12 for 2014. This is a fairly strong level of demonstrated growth which is well above the market’s implied estimate for earnings growth of 3.91% over the next 7-10 years. In fact, the historical growth is around 13.27% per year, so the market is expecting a very significant drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, and therefore returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

Be sure to check out previous ModernGraham valuations of Intel Corporation (INTC) for more perspective!

Read the full valuation on Seeking Alpha!

INTC Chart

INTC data by YCharts

Disclaimer:  The author did not hold a position in Intel Corporation (INTC) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Intel Corporation Quarterly Valuation – August 2014 $INTC

500px-Intel-logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Intel Corporation (INTC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Intel Corporation, incorporated in 1968, designs and manufactures integrated digital technology platforms. A platform consists of a microprocessor and chipset. The Company sells these platforms primarily to original equipment manufacturers (OEMs), original design manufacturers (ODMs), and industrial and communications equipment manufacturers in the computing and communications industries. The Company’s platforms are used in a range of applications, such as personal computers (PCs) (including Ultrabook systems), data centers, tablets, smartphones, automobiles, automated factory systems and medical devices. The Company also develops and sells software and services primarily focused on security and technology integration. In February 2014, M/A-COM Technology Solutions Holdings Inc announced that its subsidiary Mindspeed Technologies Inc completed the sale of assets of its wireless infrastructure business unit to Intel Corporation.
INTC Chart

INTC data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 7/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $34.17
MG Value $58.13
MG Opinion Undervalued
Value Based on 3% Growth $30.34
Value Based on 0% Growth $17.79
Market Implied Growth Rate 3.91%
NCAV -$0.72
PEmg 16.33
Current Ratio 2.37
PB Ratio 2.85

Balance Sheet – 6/28/2014

Current Assets $29,006,000,000
Current Liabilities $12,251,000,000
Total Debt $13,180,000,000
Total Assets $91,793,000,000
Intangible Assets $15,318,000,000
Total Liabilities $32,546,000,000
Outstanding Shares 4,948,000,000

Earnings Per Share

2014 (estimate) $2.13
2013 $1.89
2012 $2.13
2011 $2.39
2010 $2.01
2009 $0.77
2008 $0.92
2007 $1.18
2006 $0.86
2005 $1.40
2004 $1.16

Earnings Per Share – ModernGraham

2014 (estimate) $2.09
2013 $2.00
2012 $1.91
2011 $1.69
2010 $1.27
2009 $0.95

Dividend History
INTC Dividend Chart

INTC Dividend data by YCharts

Conclusion:

Intel Corporation is suitable for either the Defensive Investor or the Enterprising Investor.  The company passes all of the requirements of both investor types, which is a rare accomplishment.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.27 in 2010 to an estimated $2.09 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 3.91% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out the previous ModernGraham valuations of Intel Corporation (INTC) for more perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Intel Corporation (INTC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Intel Corporation (INTC) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Back To Top