Intel is the largest chipmaker in the world. It develops and manufactures microprocessors and platform solutions for the global personal computer market. Intel pioneered the x86 architecture for microprocessors.
I estimated the firm's WACC today at 10.32% using the Capital Asset Pricing Model and the company's recent SEC filings.
Recent free cash flows and growth rates:
Average Annual Growth FCF is~ 44%. CAGR FCF is about 27%. Consensus Forecast Industry 5-Year Growth is 16% per year. Consensus Forecast Company 5-Year Growth is about 11% per year.
Starting at $8673 million FCF, assuming the company achieves a 5-year growth rate in FCF of 11% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:
Discounted Cash Flow Valuation
The firm's future cash flows, discounted at a WACC of 10.32%, give a present value for the entire firm (Debt + Equity) of $140,310 million. If the firm's fair value of debt is estimated at $7400 million, then the fair value of the firm's equity could be $132,910 million. $132,910 million / 5250 million outstanding shares is approximately $25 per share and a 20% margin of safety is $20/share.
Sources:
Morningstar.com
Yahoo! Finance
INTC.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate anypositions within the next 72 hours.
I estimated the firm's WACC today at 10.32% using the Capital Asset Pricing Model and the company's recent SEC filings.
Recent free cash flows and growth rates:
Year | FCF $Millions |
2001 | 1345 |
2002 | 4426 |
2003 | 7859 |
2004 | 9276 |
2005 | 9005 |
2006 | 4841 |
2007 | 7625 |
2008 | 5729 |
2009 | 6655 |
2010 | 11485 |
TTM | 8673 |
Average Annual Growth FCF is~ 44%. CAGR FCF is about 27%. Consensus Forecast Industry 5-Year Growth is 16% per year. Consensus Forecast Company 5-Year Growth is about 11% per year.
Starting at $8673 million FCF, assuming the company achieves a 5-year growth rate in FCF of 11% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:
Discounted Cash Flow Valuation
Year | FCF $Millions |
0 | 8673 |
1 | 9627 |
2 | 10686 |
3 | 11861 |
4 | 13166 |
5 | 14615 |
Terminal Value | 157130 |
The firm's future cash flows, discounted at a WACC of 10.32%, give a present value for the entire firm (Debt + Equity) of $140,310 million. If the firm's fair value of debt is estimated at $7400 million, then the fair value of the firm's equity could be $132,910 million. $132,910 million / 5250 million outstanding shares is approximately $25 per share and a 20% margin of safety is $20/share.
Sources:
Morningstar.com
Yahoo! Finance
INTC.com
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate anypositions within the next 72 hours.
