Intrinsic value of Intel - INTC

Previous Close

$33.65

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$33.65

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 158.1

 

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
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
Revenue, $m
  59,387
  65,207
  71,284
  77,620
  84,217
  91,080
  98,216
  105,632
  113,339
  121,347
  129,671
  138,325
  147,325
  156,688
  166,435
  176,584
  187,158
  198,181
  209,676
  221,671
  234,192
  247,268
  260,930
  275,210
  290,141
  305,759
  322,101
  339,205
  357,112
  375,864
  395,507
Variable operating expenses, $m
 
  48,311
  52,682
  57,239
  61,984
  66,920
  72,052
  77,387
  82,930
  88,690
  94,677
  99,492
  105,965
  112,700
  119,710
  127,010
  134,615
  142,543
  150,812
  159,439
  168,444
  177,850
  187,676
  197,947
  208,687
  219,920
  231,674
  243,976
  256,856
  270,344
  284,472
Fixed operating expenses, $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
Total operating expenses, $m
  46,605
  48,311
  52,682
  57,239
  61,984
  66,920
  72,052
  77,387
  82,930
  88,690
  94,677
  99,492
  105,965
  112,700
  119,710
  127,010
  134,615
  142,543
  150,812
  159,439
  168,444
  177,850
  187,676
  197,947
  208,687
  219,920
  231,674
  243,976
  256,856
  270,344
  284,472
Operating income, $m
  12,782
  16,896
  18,602
  20,381
  22,233
  24,160
  26,163
  28,245
  30,409
  32,657
  34,994
  38,834
  41,360
  43,989
  46,725
  49,574
  52,543
  55,637
  58,865
  62,232
  65,747
  69,418
  73,254
  77,263
  81,454
  85,839
  90,427
  95,229
  100,256
  105,520
  111,035
EBITDA, $m
  20,572
  24,789
  27,099
  29,508
  32,016
  34,625
  37,338
  40,157
  43,087
  46,132
  49,296
  52,586
  56,007
  59,567
  63,272
  67,130
  71,150
  75,341
  79,711
  84,271
  89,031
  94,002
  99,195
  104,624
  110,300
  116,238
  122,450
  128,952
  135,760
  142,889
  150,357
Interest expense (income), $m
  682
  723
  868
  1,020
  1,178
  1,343
  1,515
  1,693
  1,879
  2,072
  2,272
  2,480
  2,697
  2,922
  3,156
  3,400
  3,654
  3,918
  4,194
  4,482
  4,782
  5,095
  5,422
  5,764
  6,121
  6,495
  6,885
  7,294
  7,722
  8,170
  8,639
Earnings before tax, $m
  12,936
  16,174
  17,735
  19,362
  21,055
  22,817
  24,648
  26,552
  28,530
  30,586
  32,722
  36,353
  38,663
  41,067
  43,569
  46,174
  48,889
  51,719
  54,671
  57,750
  60,965
  64,323
  67,832
  71,499
  75,333
  79,344
  83,542
  87,934
  92,534
  97,351
  102,396
Tax expense, $m
  2,620
  4,367
  4,788
  5,228
  5,685
  6,161
  6,655
  7,169
  7,703
  8,258
  8,835
  9,815
  10,439
  11,088
  11,764
  12,467
  13,200
  13,964
  14,761
  15,593
  16,461
  17,367
  18,315
  19,305
  20,340
  21,423
  22,556
  23,742
  24,984
  26,285
  27,647
Net income, $m
  10,316
  11,807
  12,946
  14,134
  15,370
  16,656
  17,993
  19,383
  20,827
  22,327
  23,887
  26,538
  28,224
  29,979
  31,805
  33,707
  35,689
  37,755
  39,910
  42,158
  44,505
  46,956
  49,517
  52,194
  54,993
  57,921
  60,985
  64,192
  67,550
  71,066
  74,749

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
  105,684
  115,534
  125,802
  136,494
  147,618
  159,183
  171,202
  183,693
  196,673
  210,164
  224,190
  238,776
  253,952
  269,748
  286,198
  303,336
  321,201
  339,832
  359,272
  379,565
  400,758
  422,901
  446,045
  470,245
  495,558
  522,043
  549,764
  578,787
  609,180
  641,017
Adjusted assets (=assets-cash), $m
  96,228
  105,684
  115,534
  125,802
  136,494
  147,618
  159,183
  171,202
  183,693
  196,673
  210,164
  224,190
  238,776
  253,952
  269,748
  286,198
  303,336
  321,201
  339,832
  359,272
  379,565
  400,758
  422,901
  446,045
  470,245
  495,558
  522,043
  549,764
  578,787
  609,180
  641,017
Revenue / Adjusted assets
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
  0.617
Average production assets, $m
  40,728
  44,732
  48,901
  53,247
  57,773
  62,481
  67,376
  72,463
  77,750
  83,244
  88,954
  94,891
  101,065
  107,488
  114,174
  121,137
  128,391
  135,952
  143,838
  152,066
  160,655
  169,626
  178,998
  188,794
  199,037
  209,751
  220,961
  232,694
  244,979
  257,843
  271,318
Working capital, $m
  15,206
  3,000
  3,279
  3,571
  3,874
  4,190
  4,518
  4,859
  5,214
  5,582
  5,965
  6,363
  6,777
  7,208
  7,656
  8,123
  8,609
  9,116
  9,645
  10,197
  10,773
  11,374
  12,003
  12,660
  13,346
  14,065
  14,817
  15,603
  16,427
  17,290
  18,193
Total debt, $m
  25,283
  24,789
  29,132
  33,661
  38,376
  43,281
  48,382
  53,682
  59,191
  64,915
  70,864
  77,050
  83,482
  90,175
  97,141
  104,395
  111,953
  119,831
  128,048
  136,621
  145,570
  154,916
  164,681
  174,888
  185,560
  196,723
  208,403
  220,628
  233,427
  246,831
  260,870
Total liabilities, $m
  47,101
  46,607
  50,950
  55,479
  60,194
  65,099
  70,200
  75,500
  81,009
  86,733
  92,682
  98,868
  105,300
  111,993
  118,959
  126,213
  133,771
  141,649
  149,866
  158,439
  167,388
  176,734
  186,499
  196,706
  207,378
  218,541
  230,221
  242,446
  255,245
  268,649
  282,688
Total equity, $m
  66,226
  59,077
  64,583
  70,323
  76,300
  82,518
  88,983
  95,702
  102,684
  109,940
  117,482
  125,322
  133,476
  141,959
  150,789
  159,984
  169,565
  179,551
  189,966
  200,833
  212,177
  224,024
  236,402
  249,339
  262,867
  277,017
  291,822
  307,318
  323,542
  340,532
  358,328
Total liabilities and equity, $m
  113,327
  105,684
  115,533
  125,802
  136,494
  147,617
  159,183
  171,202
  183,693
  196,673
  210,164
  224,190
  238,776
  253,952
  269,748
  286,197
  303,336
  321,200
  339,832
  359,272
  379,565
  400,758
  422,901
  446,045
  470,245
  495,558
  522,043
  549,764
  578,787
  609,181
  641,016
Debt-to-equity ratio
  0.382
  0.420
  0.450
  0.480
  0.500
  0.520
  0.540
  0.560
  0.580
  0.590
  0.600
  0.610
  0.630
  0.640
  0.640
  0.650
  0.660
  0.670
  0.670
  0.680
  0.690
  0.690
  0.700
  0.700
  0.710
  0.710
  0.710
  0.720
  0.720
  0.720
  0.730
Adjusted equity ratio
  0.511
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  10,316
  11,807
  12,946
  14,134
  15,370
  16,656
  17,993
  19,383
  20,827
  22,327
  23,887
  26,538
  28,224
  29,979
  31,805
  33,707
  35,689
  37,755
  39,910
  42,158
  44,505
  46,956
  49,517
  52,194
  54,993
  57,921
  60,985
  64,192
  67,550
  71,066
  74,749
Depreciation, amort., depletion, $m
  7,790
  7,893
  8,497
  9,127
  9,783
  10,465
  11,175
  11,912
  12,678
  13,474
  14,302
  13,752
  14,647
  15,578
  16,547
  17,556
  18,607
  19,703
  20,846
  22,039
  23,283
  24,583
  25,942
  27,361
  28,846
  30,399
  32,023
  33,724
  35,504
  37,369
  39,321
Funds from operations, $m
  22,476
  19,700
  21,443
  23,261
  25,153
  27,121
  29,168
  31,295
  33,505
  35,802
  38,189
  40,290
  42,871
  45,557
  48,352
  51,263
  54,296
  57,458
  60,756
  64,196
  67,788
  71,539
  75,459
  79,556
  83,839
  88,320
  93,009
  97,916
  103,054
  108,434
  114,071
Change in working capital, $m
  668
  268
  280
  291
  303
  316
  328
  341
  355
  368
  383
  398
  414
  431
  448
  467
  486
  507
  529
  552
  576
  602
  628
  657
  687
  718
  752
  787
  824
  863
  904
Cash from operations, $m
  21,808
  24,369
  21,164
  22,969
  24,850
  26,806
  28,840
  30,954
  33,150
  35,433
  37,806
  39,892
  42,457
  45,126
  47,904
  50,796
  53,810
  56,951
  60,227
  63,645
  67,212
  70,938
  74,830
  78,899
  83,152
  87,602
  92,257
  97,129
  102,230
  107,572
  113,167
Maintenance CAPEX, $m
  0
  -5,903
  -6,483
  -7,087
  -7,717
  -8,373
  -9,055
  -9,765
  -10,502
  -11,268
  -12,064
  -12,892
  -13,752
  -14,647
  -15,578
  -16,547
  -17,556
  -18,607
  -19,703
  -20,846
  -22,039
  -23,283
  -24,583
  -25,942
  -27,361
  -28,846
  -30,399
  -32,023
  -33,724
  -35,504
  -37,369
New CAPEX, $m
  -9,625
  -4,004
  -4,169
  -4,346
  -4,526
  -4,708
  -4,895
  -5,088
  -5,287
  -5,494
  -5,710
  -5,937
  -6,174
  -6,423
  -6,686
  -6,962
  -7,254
  -7,561
  -7,886
  -8,228
  -8,589
  -8,970
  -9,372
  -9,796
  -10,243
  -10,714
  -11,210
  -11,733
  -12,284
  -12,864
  -13,475
Cash from investing activities, $m
  -25,817
  -9,907
  -10,652
  -11,433
  -12,243
  -13,081
  -13,950
  -14,853
  -15,789
  -16,762
  -17,774
  -18,829
  -19,926
  -21,070
  -22,264
  -23,509
  -24,810
  -26,168
  -27,589
  -29,074
  -30,628
  -32,253
  -33,955
  -35,738
  -37,604
  -39,560
  -41,609
  -43,756
  -46,008
  -48,368
  -50,844
Free cash flow, $m
  -4,009
  14,462
  10,512
  11,536
  12,607
  13,725
  14,889
  16,101
  17,362
  18,671
  20,031
  21,064
  22,531
  24,056
  25,640
  27,287
  29,000
  30,782
  32,638
  34,570
  36,584
  38,684
  40,875
  43,161
  45,548
  48,042
  50,648
  53,373
  56,222
  59,203
  62,323
Issuance/(repayment) of debt, $m
  1,219
  4,140
  4,344
  4,528
  4,715
  4,905
  5,100
  5,301
  5,508
  5,724
  5,950
  6,185
  6,433
  6,693
  6,966
  7,254
  7,558
  7,878
  8,216
  8,573
  8,949
  9,346
  9,765
  10,207
  10,672
  11,163
  11,680
  12,225
  12,799
  13,403
  14,040
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
  4,140
  4,344
  4,528
  4,715
  4,905
  5,100
  5,301
  5,508
  5,724
  5,950
  6,185
  6,433
  6,693
  6,966
  7,254
  7,558
  7,878
  8,216
  8,573
  8,949
  9,346
  9,765
  10,207
  10,672
  11,163
  11,680
  12,225
  12,799
  13,403
  14,040
Total cash flow (excl. dividends), $m
  -4,823
  18,602
  14,856
  16,064
  17,322
  18,630
  19,990
  21,402
  22,870
  24,395
  25,981
  27,249
  28,964
  30,748
  32,606
  34,541
  36,558
  38,661
  40,854
  43,143
  45,534
  48,030
  50,640
  53,367
  56,220
  59,205
  62,328
  65,598
  69,021
  72,607
  76,363
Retained Cash Flow (-), $m
  -5,141
  -5,316
  -5,506
  -5,740
  -5,977
  -6,218
  -6,465
  -6,719
  -6,982
  -7,256
  -7,541
  -7,840
  -8,154
  -8,483
  -8,830
  -9,195
  -9,580
  -9,986
  -10,415
  -10,867
  -11,344
  -11,847
  -12,378
  -12,938
  -13,528
  -14,150
  -14,805
  -15,496
  -16,224
  -16,990
  -17,796
Prev. year cash balance distribution, $m
 
  12,465
  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
 
  25,751
  9,350
  10,324
  11,345
  12,412
  13,525
  14,683
  15,888
  17,140
  18,440
  19,409
  20,810
  22,265
  23,776
  25,346
  26,978
  28,674
  30,439
  32,276
  34,190
  36,183
  38,262
  40,430
  42,693
  45,055
  47,523
  50,101
  52,797
  55,617
  58,567
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
 
  24,689
  8,559
  8,985
  9,342
  9,621
  9,815
  9,920
  9,930
  9,846
  9,667
  9,217
  8,880
  8,466
  7,982
  7,441
  6,856
  6,239
  5,606
  4,970
  4,344
  3,743
  3,175
  2,650
  2,174
  1,753
  1,386
  1,075
  817
  607
  441
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 designs, manufactures, and sells computer, networking, and communications platforms worldwide. It operates through Client Computing Group, Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, Intel Security Group, Programmable Solutions Group, and All Other segments. The company’s platforms are used in notebooks, 2 in 1 systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, and mobile communication components; enterprise, cloud, and communication infrastructure; and retail, transportation, industrial, video, buildings, and other market segments. It offers microprocessors that processes system data and controls other devices in the system; chipsets, which send data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive or solid-state drive, and optical disc drives; and system-on-chip and multichip packaging products that integrate its central processing units with other system components onto a single chip. The company also NAND flash memory products primarily used in solid-state drives; security software products that secure computers, mobile devices, and networks; programmable semiconductors and related products for communications, data center, industrial, military, and automotive market segments. It serves original equipment manufacturers, original design manufacturers, cloud and communications service providers, and industrial, communications, and automotive equipment manufacturers. The company was founded in 1968 and is based in Santa Clara, California.

FINANCIAL RATIOS  of  Intel (INTC)

Valuation Ratios
P/E Ratio 15.4
Price to Sales 2.7
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow 13.1
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 $59387 million for the last fiscal year's total revenue generated by Intel. The default revenue input number comes from 2016 income statement of Intel. 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 9.8% 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, 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.
    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 74.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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 3.5% for Intel.

Corporate tax rate of 27% is the nominal tax rate for Intel. 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 68.6%.

Life of production assets of 6.9 years is the average useful life of capital assets used in Intel 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 4.6%. 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 - $66226 million for Intel - 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 4698.86 million for Intel 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 at the current share price and the inputted number of shares is $158.1 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
AMD Advanced Micro 13.40 prem.  prem.
HPE Hewlett Packar 16.50 prem.  prem.
NVDA NVIDIA 146.58 prem.  prem.
HPQ HP 17.77 prem.  prem.
MU Micron Technol 31.66 prem.  prem.
TXN Texas Instrume 76.95 prem.  prem.
QCOM Qualcomm 55.43 prem.  prem.
MSFT Microsoft 69.21 prem.  prem.

COMPANY NEWS

▶ Chipmaker AMD Makes a Big Bet on Brand-New Tech   [Jun-28-17 06:30AM  Fortune]
▶ 3 Tech Stocks With Surprisingly Low P/E Ratios   [Jun-27-17 05:08PM  Zacks]
▶ [$$] Vuzix Can Win Where Intel Failed   [03:22PM  Barrons.com]
▶ Short Sellers Back Off Major Semiconductors   [09:45AM  24/7 Wall St.]
▶ Why AMD's Stock Is Set for a Fall   [06:00AM  Investopedia]
▶ Better Buy: Micron Technology, Inc. vs. Intel   [Jun-25-17 06:54PM  Motley Fool]
▶ Should You Follow These Analysts Out of Intel Stock?   [Jun-23-17 07:31PM  Motley Fool]
▶ AMD shares climb even higher on return to server chip market   [03:47PM  American City Business Journals]
▶ Wheeler-Dealer   [01:33PM  Forbes]
▶ Uber Employees Want Kalanick Back   [01:32PM  TheStreet.com]
Stock chart of INTC Financial statements of INTC Annual reports of INTC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.