Intel is a leading manufacturer of integrated circuits. The markets that Intel serves include: makers of PCs, communications, industrial automation, military, and other electronic equipment. Intel’s main products are: microprocessors (notably, the Pentium series), microcontrollers, and memory chips. Intel’s foreign business accounted for 79% of Intel’s 2020 sales. This week, I fundamentally analyze Intel’s stock. I review Intel’s operating segments, look at its key ratios, derive the intrinsic value using Discounted Cash Flow (DCF) analysis, and calculate the expected rate of return from this investment. Since this is a long video, please feel free to use the time stamps in the video if you only wish to watch certain topics.
I review various key ratios such as Revenue, Net Income, Shares outstanding, Dividends, Payout Ratio, Free Cash Flows (FCF), Financial Leverage, Current Ratio, Debt to Equity Ratio, Return on Equity (ROE), Days Sales Outstanding (DSO), Days Inventory, Payable Period, Cash Conversion Cycle, Inventory Turnover, etc.
After taking into account Intel’s 2020 free cash flow of $20,931 million figure, a 6% growth rate of FCF (growth for the next 10 years), 10% discount rate, 3% long term growth rate (growth from 10 year mark to perpetuity), 4,178 million shares outstanding, and $33,897 million of long term debt, the DCF analysis yields us an intrinsic value of $82.03 per share. Using the current stock price of about $53 per share, and taking into the shares outstanding and future projects of free cash flows, we get the annual expected rate of return to be 13.5% if we hold this security through 2060.
0:39 Business Overview
7:40 Key Ratios Analysis
17:07 Discounted Cash Flow Analysis / Intrinsic Value
19:03 Expected Rate of Return Calculation
20:03 Summary / Conclusion
Intel’s Website: here
Morningstar Key Ratios Link: here.
Useful Resources here.
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