Intel (INTC) Stock Analysis
The Intel dividend has been paid continuously since 1992 and increased for 7 consecutive years qualifying the company as a Dividend Challenger.
Current Dividend Annualized: $1.39
Note: On January 13, 2021 Intel announced CEO Bob Swan would step aside for VMware CEO Gelsinger to replace him. Gelsinger spent 30 years at Intel before leaving in 2019 for EMC Corp. Intel stock rose significantly after the announcement.
Intel (INTC) Intrinsic Value – Margin of Safety Analysis
(updated September 2021)
Normalized Diluted Earnings Per Share: $4.50
Cash Flow From Operations (CFO) Per Share (TTM): $7.84
Free Cash Flow Per Share (TTM): $3.96
Estimated Intrinsic Value: $64
Target Buy Price Based on Required Margin of Safety = $54
(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 = $74
(Allow Overvaluation Adjusted by Risk Stability Grade:
A = 20%, B = 15%, C = 10%, D = 5%, F = 0%)
Risk / Stability Grade: B
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: A
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.
Earnings Quality Grade: B
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: 6/30/21
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AAAMP Portfolios Position Disclosures:
Dividend Growth & Income – LONG
Treasure Trove Twelve – None
Global Dividend Balanced – LONG
Global Value – None
Global Value Aggressive – None
High Yield – None
Intel is one of the world’s largest chipmakers. It designs and manufactures microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors. It is also the prime proponent of Moore’s law for advances in semiconductor manufacturing.
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, memory, artificial intelligence, and automotive. Intel has been active on the merger and acquisitions front, recently acquiring Altera, Mobileye, Nervana, and Movidius in order to assist its efforts in non-PC arenas.
Mobile (MBLY) Acquisition
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 in 2020. 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.
Intel operates 5 main groups:
1. Client Computing Group (CCG)
Although this is a shrinking group, it is still the largest group. Its products have nearly dominated the PC desk top market for years.
2. Data Center Group (DCG)
This one of the fastest growing groups and the second largest. The Data Center Group may pass the PC Client Group in a few years. The focus is on providing energy efficient performance in data center servers which provide storage and network connectivity platforms.
3. Internet of Things Group (IoTG)
Along with the Data Center Group, this is where Intel is growing fastest. IoT is somewhat ambiguous, because it involves so many products. It can be described as an assortment of mini processors, sensors, and wireless communication devices that are able to exchange and make use of information (interoperable ecosystems). Increasing security and simplifying connectivity are the main goals of the group.
4. Software and Services Operating Group (SSG)
This groups enables platforms for use across multiple operating systems, applications, and services. One of their biggest goals is to protect customers from malware and emerging online treats. Security is in high demand and becoming more important every day.
5. All Other
Includes all new devices and non-volatile memory solutions.
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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.