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Intel (INTC) Stock Analysis

by | Dividend Stock Analysis

Intel Logo

Intel Dividend

The Intel (INTC) dividend has been paid continuously since 1992 and regularly increased, but not every year. The company has increased the dividend for 8 consecutive years qualifying the company as a Dividend Challenger.

Current Dividend Annualized: $1.46

The earnings report for period ending 6/30/22 was significantly bad. The company did produce $5.49 in cash flow per share demonstrating the company is still a huge cash flow generator. However other metrics and forward guidance introduces short term uncertainty that is above normal. Due to these changes we have to require a larger margin of safety and I have reduced the Intel risk/stability grade to a ‘”D”. 

 

 

Intel Logo

 

Intel (INTC) Intrinsic Value – Margin of Safety Analysis            

(updated August 2022)

Normalized Diluted Earnings Per Share: $5.07
Free Cash Flow Per Share (TTM): $-0.39
Cash Flow From Operations (CFO) Per Share (TTM): $5.49

Estimated Intrinsic Value: $47

Target Buy Price Based on Required Margin of Safety =  $33
(Required Margin of Safety Based On Risk Stability Grade:

A = 10%, B = 20%, C = 30%, D = 40%, F = 50%)

Target SELL Price Based on Estimated Intrinsic Value = $49
(Allow Overvaluation Adjusted by Risk Stability Grade:

A = 20%, B = 15%, C = 10%, D = 5%, F = 0%)

 

Risk / Stability Grade: D

A grade indicates a quality company with a strong balance sheet, high earnings quality, and a positive business environment. These stocks require the slimmest margin of safety within the stock universe.

B grade indicates a company with a good balance sheet, good earning quality, and a stable business environment. The margin of safety required should be greater than stocks with an A grade but less than the average stock.

C grade indicates a company with a sufficient balance sheet, at least average earnings quality, and a reasonably stable business environment. The margin of safety required is greater than A & B stocks, but less than D & F stocks.

D grade indicates a company in good standing but has issues that could affect its stability and long term risks. D rated stocks should require a large margin of safety when purchased.

F grade indicates a company with significant issues that are currently affecting its stability and long term risks. Require an extremely large margin of safety for F rated stocks when purchased.

 

Financial Risk Grade: B

A grade indicates an extremely low probability of a dividend cut. This rating is reserved for companies with strong balance sheets and/or excellent dividend histories.

B grade indicates a very low probability for a dividend cut.

C grade indicates a low probability for a dividend cut and/or average safety risk.

D grade indicates there are issues that should be considered concerning future dividend payments.

F grade indicates serious dividend safety risks. Investors should complete comprehensive due diligence before investing.

 

Business Quality Grade: C

A grade indicates earnings quality is high or far above average.

B grade indicates earnings quality is good and/or above average.

C grade indicates earnings quality is acceptable or average.

D grade indicates earnings quality is poor and requires thoughtful due diligence.

F grade indicates the quality of the earnings is poor or far below average requiring serious due diligence.

Earnings Report:  6/30/22

AAAMP Portfolios Position Disclosures:
Dividend Growth & Income – LONG
Treasure Trove Dividend – None
Global Dividend Balanced – LONG
Global Value – LONG
Global Value Aggressive – LONG
High Yield – None

Description

Sector: Technology
Industry: Semiconductors

Intel Corp is one of the world’s largest chipmakers. It designs and manufactures microprocessors and platform solutions for the global personal computer and data center markets. While Intel’s server processor business has benefited from the shift to the cloud, the firm has also been expanding into new adjacencies as the personal computer market has declined. These include areas such as the Internet of Things, artificial intelligence, and automotive.

New CEO Pat Gelsinger has the company on offense by using its gigantic cash flows to reinvest for the future including a new semiconductor factory in Arizona. The company is shifting its business model to become a manufacturer for other chip designers, in addition to continuing to design and manufacture its own processors.

Mobileye 

On December 7, 2021 Intel announced it plans to take Mobileye public in 2022 through a public offering of newly issues shares in the U.S.  The IPO should represent a significant profit since the purchase in 2017.

In 2017 Intel acquired Mobile (MBLY) for 15.3 billion. Mobileye is a leading technology provider for the autonomous vehicle industry. This could be a long term game changer for Intel. Mobileye now has Intel’s solid balance sheet and almost unlimited cash to grow the company. This acquisition has had large positive synergies including Intel’s global reach in manufacturing and marketing.

The acquisition of Mobileye establishes Intel as the leader in autonomous driving technology. Intel has the resources and knows how to excel in a market that is going to have exponential growth. Not only is the stock reasonably priced, it now has a potential driver for growing company earnings for the next couple of decades.

Intel continues making strategic acquisitions, although smaller than the Mobile acquisition, they are acquiring companies with the ability to help Intel grow earnings and cash flow in the next decade.

 

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Disclaimer:
While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.