Intrinsic value of Intel Corporation - INTC

Previous Close

$58.49

  Intrinsic Value

$99.37

stock screener

  Rating & Target

str. buy

+70%

Previous close

$58.49

 
Intrinsic value

$99.37

 
Up/down potential

+70%

 
Rating

str. buy

We calculate the intrinsic value of INTC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.28
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  59,387
  77,508
  84,452
  91,685
  99,210
  107,035
  115,167
  123,619
  132,401
  141,529
  151,018
  160,886
  171,151
  181,836
  192,961
  204,552
  216,632
  229,230
  242,374
  256,093
  270,420
  285,388
  301,031
  317,387
  334,494
  352,393
  371,125
  390,737
  411,273
  432,784
  455,320
Variable operating expenses, $m
 
  26,590
  28,533
  30,558
  32,664
  34,854
  37,130
  39,495
  41,953
  44,508
  47,163
  45,027
  47,900
  50,891
  54,004
  57,248
  60,629
  64,155
  67,834
  71,673
  75,683
  79,872
  84,250
  88,828
  93,615
  98,625
  103,868
  109,356
  115,104
  121,124
  127,431
Fixed operating expenses, $m
 
  23,833
  24,357
  24,893
  25,441
  26,001
  26,573
  27,157
  27,755
  28,365
  28,989
  29,627
  30,279
  30,945
  31,626
  32,322
  33,033
  33,759
  34,502
  35,261
  36,037
  36,830
  37,640
  38,468
  39,314
  40,179
  41,063
  41,966
  42,890
  43,833
  44,798
Total operating expenses, $m
  46,605
  50,423
  52,890
  55,451
  58,105
  60,855
  63,703
  66,652
  69,708
  72,873
  76,152
  74,654
  78,179
  81,836
  85,630
  89,570
  93,662
  97,914
  102,336
  106,934
  111,720
  116,702
  121,890
  127,296
  132,929
  138,804
  144,931
  151,322
  157,994
  164,957
  172,229
Operating income, $m
  12,782
  27,085
  31,562
  36,234
  41,105
  46,180
  51,465
  56,966
  62,694
  68,656
  74,865
  86,231
  92,972
  100,000
  107,331
  114,982
  122,971
  131,316
  140,038
  149,159
  158,700
  168,686
  179,141
  190,091
  201,564
  213,589
  226,195
  239,414
  253,280
  267,827
  283,091
EBITDA, $m
  20,572
  39,690
  44,858
  50,249
  55,869
  61,722
  67,815
  74,157
  80,758
  87,628
  94,781
  102,230
  109,992
  118,083
  126,520
  135,323
  144,513
  154,112
  164,141
  174,626
  185,592
  197,066
  209,077
  221,654
  234,828
  248,632
  263,101
  278,271
  294,179
  310,865
  328,370
Interest expense (income), $m
  682
  1,423
  1,690
  1,972
  2,266
  2,572
  2,890
  3,221
  3,564
  3,921
  4,292
  4,678
  5,079
  5,496
  5,931
  6,383
  6,854
  7,345
  7,857
  8,391
  8,949
  9,531
  10,140
  10,776
  11,440
  12,136
  12,863
  13,625
  14,422
  15,256
  16,131
Earnings before tax, $m
  12,936
  25,661
  29,871
  34,262
  38,839
  43,608
  48,575
  53,746
  59,129
  64,735
  70,573
  81,553
  87,893
  94,504
  101,400
  108,599
  116,116
  123,971
  132,181
  140,768
  149,751
  159,155
  169,001
  179,316
  190,124
  201,453
  213,332
  225,789
  238,858
  252,570
  266,960
Tax expense, $m
  2,620
  6,929
  8,065
  9,251
  10,487
  11,774
  13,115
  14,511
  15,965
  17,478
  19,055
  22,019
  23,731
  25,516
  27,378
  29,322
  31,351
  33,472
  35,689
  38,007
  40,433
  42,972
  45,630
  48,415
  51,333
  54,392
  57,600
  60,963
  64,492
  68,194
  72,079
Net income, $m
  10,316
  18,733
  21,806
  25,011
  28,353
  31,834
  35,459
  39,234
  43,164
  47,256
  51,518
  59,534
  64,162
  68,988
  74,022
  79,277
  84,765
  90,499
  96,492
  102,760
  109,318
  116,183
  123,371
  130,901
  138,791
  147,061
  155,732
  164,826
  174,366
  184,376
  194,881

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  17,099
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  113,327
  139,906
  152,441
  165,496
  179,079
  193,203
  207,883
  223,138
  238,991
  255,467
  272,595
  290,407
  308,938
  328,224
  348,306
  369,227
  391,033
  413,773
  437,498
  462,262
  488,123
  515,140
  543,377
  572,901
  603,780
  636,088
  669,902
  705,301
  742,371
  781,199
  821,878
Adjusted assets (=assets-cash), $m
  96,228
  139,906
  152,441
  165,496
  179,079
  193,203
  207,883
  223,138
  238,991
  255,467
  272,595
  290,407
  308,938
  328,224
  348,306
  369,227
  391,033
  413,773
  437,498
  462,262
  488,123
  515,140
  543,377
  572,901
  603,780
  636,088
  669,902
  705,301
  742,371
  781,199
  821,878
Revenue / Adjusted assets
  0.617
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
Average production assets, $m
  40,728
  69,369
  75,585
  82,058
  88,793
  95,796
  103,075
  110,639
  118,499
  126,668
  135,161
  143,993
  153,181
  162,743
  172,700
  183,074
  193,886
  205,161
  216,925
  229,203
  242,026
  255,422
  269,423
  284,061
  299,372
  315,391
  332,157
  349,709
  368,090
  387,342
  407,512
Working capital, $m
  15,206
  1,938
  2,111
  2,292
  2,480
  2,676
  2,879
  3,090
  3,310
  3,538
  3,775
  4,022
  4,279
  4,546
  4,824
  5,114
  5,416
  5,731
  6,059
  6,402
  6,761
  7,135
  7,526
  7,935
  8,362
  8,810
  9,278
  9,768
  10,282
  10,820
  11,383
Total debt, $m
  25,283
  31,300
  36,527
  41,971
  47,635
  53,525
  59,646
  66,008
  72,618
  79,489
  86,631
  94,059
  101,786
  109,828
  118,202
  126,927
  136,020
  145,502
  155,396
  165,722
  176,506
  187,772
  199,547
  211,859
  224,735
  238,208
  252,308
  267,070
  282,528
  298,719
  315,682
Total liabilities, $m
  47,101
  58,341
  63,568
  69,012
  74,676
  80,566
  86,687
  93,049
  99,659
  106,530
  113,672
  121,100
  128,827
  136,869
  145,243
  153,968
  163,061
  172,543
  182,437
  192,763
  203,547
  214,813
  226,588
  238,900
  251,776
  265,249
  279,349
  294,111
  309,569
  325,760
  342,723
Total equity, $m
  66,226
  81,565
  88,873
  96,484
  104,403
  112,637
  121,196
  130,090
  139,332
  148,937
  158,923
  169,308
  180,111
  191,354
  203,062
  215,259
  227,972
  241,230
  255,061
  269,499
  284,576
  300,327
  316,789
  334,001
  352,004
  370,839
  390,553
  411,191
  432,802
  455,439
  479,155
Total liabilities and equity, $m
  113,327
  139,906
  152,441
  165,496
  179,079
  193,203
  207,883
  223,139
  238,991
  255,467
  272,595
  290,408
  308,938
  328,223
  348,305
  369,227
  391,033
  413,773
  437,498
  462,262
  488,123
  515,140
  543,377
  572,901
  603,780
  636,088
  669,902
  705,302
  742,371
  781,199
  821,878
Debt-to-equity ratio
  0.382
  0.380
  0.410
  0.440
  0.460
  0.480
  0.490
  0.510
  0.520
  0.530
  0.550
  0.560
  0.570
  0.570
  0.580
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.630
  0.630
  0.630
  0.640
  0.640
  0.650
  0.650
  0.650
  0.660
  0.660
Adjusted equity ratio
  0.511
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583
  0.583

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10,316
  18,733
  21,806
  25,011
  28,353
  31,834
  35,459
  39,234
  43,164
  47,256
  51,518
  59,534
  64,162
  68,988
  74,022
  79,277
  84,765
  90,499
  96,492
  102,760
  109,318
  116,183
  123,371
  130,901
  138,791
  147,061
  155,732
  164,826
  174,366
  184,376
  194,881
Depreciation, amort., depletion, $m
  7,790
  12,605
  13,296
  14,015
  14,763
  15,542
  16,350
  17,191
  18,064
  18,972
  19,915
  15,999
  17,020
  18,083
  19,189
  20,342
  21,543
  22,796
  24,103
  25,467
  26,892
  28,380
  29,936
  31,562
  33,264
  35,043
  36,906
  38,857
  40,899
  43,038
  45,279
Funds from operations, $m
  22,476
  31,338
  35,102
  39,026
  43,116
  47,376
  51,810
  56,425
  61,228
  66,228
  71,434
  75,533
  81,182
  87,070
  93,211
  99,619
  106,308
  113,294
  120,595
  128,227
  136,210
  144,563
  153,307
  162,463
  172,054
  182,104
  192,638
  203,683
  215,265
  227,414
  240,160
Change in working capital, $m
  668
  166
  174
  181
  188
  196
  203
  211
  220
  228
  237
  247
  257
  267
  278
  290
  302
  315
  329
  343
  358
  374
  391
  409
  428
  447
  468
  490
  513
  538
  563
Cash from operations, $m
  21,808
  31,172
  34,928
  38,845
  42,928
  47,180
  51,607
  56,214
  61,009
  66,000
  71,197
  75,286
  80,925
  86,803
  92,933
  99,329
  106,006
  112,979
  120,266
  127,884
  135,852
  144,189
  152,916
  162,054
  171,626
  181,657
  192,170
  203,193
  214,752
  226,876
  239,597
Maintenance CAPEX, $m
  0
  -7,046
  -7,708
  -8,398
  -9,118
  -9,866
  -10,644
  -11,453
  -12,293
  -13,167
  -14,074
  -15,018
  -15,999
  -17,020
  -18,083
  -19,189
  -20,342
  -21,543
  -22,796
  -24,103
  -25,467
  -26,892
  -28,380
  -29,936
  -31,562
  -33,264
  -35,043
  -36,906
  -38,857
  -40,899
  -43,038
New CAPEX, $m
  -9,625
  -5,956
  -6,215
  -6,473
  -6,735
  -7,003
  -7,279
  -7,564
  -7,860
  -8,169
  -8,493
  -8,832
  -9,188
  -9,563
  -9,957
  -10,373
  -10,812
  -11,275
  -11,764
  -12,279
  -12,823
  -13,396
  -14,001
  -14,639
  -15,311
  -16,019
  -16,766
  -17,552
  -18,380
  -19,252
  -20,170
Cash from investing activities, $m
  -25,817
  -13,002
  -13,923
  -14,871
  -15,853
  -16,869
  -17,923
  -19,017
  -20,153
  -21,336
  -22,567
  -23,850
  -25,187
  -26,583
  -28,040
  -29,562
  -31,154
  -32,818
  -34,560
  -36,382
  -38,290
  -40,288
  -42,381
  -44,575
  -46,873
  -49,283
  -51,809
  -54,458
  -57,237
  -60,151
  -63,208
Free cash flow, $m
  -4,009
  18,170
  21,005
  23,974
  27,075
  30,311
  33,684
  37,197
  40,855
  44,664
  48,630
  51,437
  55,738
  60,221
  64,893
  69,767
  74,852
  80,161
  85,707
  91,503
  97,563
  103,901
  110,535
  117,480
  124,753
  132,374
  140,361
  148,734
  157,515
  166,726
  176,389
Issuance/(repayment) of debt, $m
  1,219
  4,941
  5,227
  5,444
  5,664
  5,890
  6,122
  6,361
  6,611
  6,871
  7,142
  7,428
  7,727
  8,042
  8,374
  8,724
  9,093
  9,483
  9,893
  10,327
  10,784
  11,266
  11,775
  12,311
  12,877
  13,472
  14,100
  14,762
  15,458
  16,191
  16,963
Issuance/(repurchase) of shares, $m
  -1,479
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -814
  4,941
  5,227
  5,444
  5,664
  5,890
  6,122
  6,361
  6,611
  6,871
  7,142
  7,428
  7,727
  8,042
  8,374
  8,724
  9,093
  9,483
  9,893
  10,327
  10,784
  11,266
  11,775
  12,311
  12,877
  13,472
  14,100
  14,762
  15,458
  16,191
  16,963
Total cash flow (excl. dividends), $m
  -4,823
  23,110
  26,233
  29,418
  32,740
  36,201
  39,805
  43,558
  47,466
  51,535
  55,772
  58,864
  63,465
  68,263
  73,267
  78,491
  83,945
  89,644
  95,600
  101,829
  108,346
  115,167
  122,310
  129,791
  137,630
  145,846
  154,461
  163,496
  172,973
  182,917
  193,352
Retained Cash Flow (-), $m
  -5,141
  -7,002
  -7,308
  -7,611
  -7,919
  -8,234
  -8,558
  -8,894
  -9,242
  -9,606
  -9,986
  -10,384
  -10,803
  -11,244
  -11,708
  -12,197
  -12,713
  -13,257
  -13,832
  -14,438
  -15,077
  -15,751
  -16,462
  -17,212
  -18,003
  -18,836
  -19,713
  -20,638
  -21,612
  -22,637
  -23,716
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  16,108
  18,924
  21,807
  24,820
  27,967
  31,247
  34,665
  38,224
  41,929
  45,786
  48,480
  52,662
  57,019
  61,560
  66,294
  71,232
  76,387
  81,769
  87,392
  93,270
  99,416
  105,847
  112,579
  119,627
  127,011
  134,748
  142,858
  151,361
  160,280
  169,636
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  15,444
  17,325
  18,978
  20,437
  21,678
  22,677
  23,419
  23,891
  24,086
  24,004
  23,022
  22,473
  21,680
  20,667
  19,463
  18,102
  16,620
  15,059
  13,456
  11,852
  10,283
  8,783
  7,379
  6,093
  4,941
  3,931
  3,066
  2,342
  1,750
  1,277
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Intel Corporation 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). It 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. The CCG operating segment includes platforms that integrates in notebook, two in one systems, desktop computers for consumers and businesses, tablets, and phones.

FINANCIAL RATIOS  of  Intel Corporation (INTC)

Valuation Ratios
P/E Ratio 26.8
Price to Sales 4.7
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 12.7
Price to Free Cash Flow 22.7
Growth Rates
Sales Growth Rate 7.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29.3%
Cap. Spend. - 3 Yr. Gr. Rate -2.2%
Financial Strength
Quick Ratio 4
Current Ratio 0.4
LT Debt to Equity 31.2%
Total Debt to Equity 38.2%
Interest Coverage 20
Management Effectiveness
Return On Assets 10.1%
Ret/ On Assets - 3 Yr. Avg. 11.6%
Return On Total Capital 11.8%
Ret/ On T. Cap. - 3 Yr. Avg. 14.4%
Return On Equity 16.2%
Return On Equity - 3 Yr. Avg. 18.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 60.9%
Gross Margin - 3 Yr. Avg. 62.4%
EBITDA Margin 36%
EBITDA Margin - 3 Yr. Avg. 40.6%
Operating Margin 21.5%
Oper. Margin - 3 Yr. Avg. 24.8%
Pre-Tax Margin 21.8%
Pre-Tax Margin - 3 Yr. Avg. 25.2%
Net Profit Margin 17.4%
Net Profit Margin - 3 Yr. Avg. 19.6%
Effective Tax Rate 20.3%
Eff/ Tax Rate - 3 Yr. Avg. 21.9%
Payout Ratio 47.7%

INTC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INTC stock intrinsic value calculation we used $70848 million for the last fiscal year's total revenue generated by Intel Corporation. The default revenue input number comes from 2016 income statement of Intel Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our INTC stock valuation model: a) initial revenue growth rate of 9.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for INTC is calculated based on our internal credit rating of Intel Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Intel Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of INTC stock the variable cost ratio is equal to 34.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $23320 million in the base year in the intrinsic value calculation for INTC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Intel Corporation.

Corporate tax rate of 27% is the nominal tax rate for Intel Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the INTC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for INTC are equal to 89.5%.

Life of production assets of 9 years is the average useful life of capital assets used in Intel Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for INTC is equal to 2.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $74563 million for Intel Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 4496.963 million for Intel Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Intel Corporation at the current share price and the inputted number of shares is $263.0 billion.

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