Intel Corp (INTC, Financial) saw a daily gain of 4.95%, despite a reported Loss Per Share of 0.68. This raises the question: Is the stock fairly valued? In this analysis, we delve into the financials of Intel, using the GuruFocus proprietary GF Value to assess its current valuation. Read on to discover whether Intel offers a viable investment opportunity.
Understanding Intel Corp (INTC, Financial)
Intel is the world's largest logic chipmaker, primarily designing and manufacturing microprocessors for global personal computer and data center markets. The company has pioneered the x86 architecture for microprocessors and has been a significant proponent of Moore's law for advancing semiconductor manufacturing. As the personal computer market has stagnated, Intel has expanded into new adjacencies, including the Internet of Things, artificial intelligence, and automotive. As of July 28, 2023, the stock price stands at $36.26, with a market cap of $151.2 billion.
The GF Value of Intel (INTC, Financial)
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. The GF Value Line, displayed on our summary page, provides an overview of the stock's ideal fair trading value. This value is calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates.
According to the GuruFocus Value calculation, Intel appears to be fairly valued. This conclusion is derived from the historical trading multiples, past business growth, and analyst estimates of future business performance. With its current price of $36.26 per share and a market cap of $151.2 billion, Intel's stock aligns closely with our GF Value Line, indicating a fair valuation.
As Intel is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
Financial Strength of Intel (INTC, Financial)
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding to buy shares. Intel has a cash-to-debt ratio of 0.55, ranking worse than 76.44% of companies in the Semiconductors industry. Based on this, GuruFocus ranks Intel's financial strength as 5 out of 10, suggesting a fair balance sheet.
Profitability and Growth of Intel
Investing in profitable companies, especially those demonstrating consistent profitability over the long term, poses less risk. Intel has been profitable 10 out of the past 10 years. Over the past twelve months, the company had a revenue of $56.4 billion and a Loss Per Share of $0.68. Its operating margin is -3.9%, ranking worse than 76.87% of companies in the Semiconductors industry. However, GuruFocus ranks Intel's profitability at 8 out of 10, indicating strong profitability.
Growth is a critical factor in a company's valuation. Intel's growth ranks worse than 87.79% of companies in the Semiconductors industry, with a 3-year average revenue growth rate worse than 78.94% of industry counterparts. Intel's 3-year average EBITDA growth rate is -13.2%, ranking worse than 87.79% of companies in the Semiconductors industry.
ROIC vs WACC: Evaluating Intel's Profitability
Another way to evaluate a company's profitability is by comparing its return on invested capital (ROIC) to its weighted cost of capital (WACC). Over the past 12 months, Intel's ROIC was -1.56, while its WACC came in at 8.08, indicating that the company is not currently creating value for shareholders.
Conclusion
In summary, Intel Corp (INTC, Financial) appears to be fairly valued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks worse than 87.79% of companies in the Semiconductors industry. To learn more about Intel stock, check out its 30-Year Financials here.
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