Long-established in the Semiconductors industry, Intel Corp (INTC, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.57%, juxtaposed with a three-month change of 34.91%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Intel Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 8/10
- Growth rank: 4/10
- GF Value rank: 1/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned Intel Corp a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Intel Corp's Business
Intel Corp, with a market cap of $185.75 billion and sales of $52.86 billion, is a leading digital chipmaker, focused on the design and manufacturing of microprocessors for the global personal computer and data center markets. Intel pioneered the x86 architecture for microprocessors and was the prime proponent of Moore's law for advances in semiconductor manufacturing. Intel remains the market share leader in central processing units in both the PC and server end markets. Intel has also been expanding into new adjacencies, such as communications infrastructure, automotive, and the Internet of Things. Further, Intel expects to leverage its chip manufacturing capabilities into an outsourced foundry model where it constructs chips for others.
Financial Strength Breakdown
Intel Corp's financial strength indicators present some concerning insights about the company's balance sheet health. With an interest coverage ratio of 0, it positions worse than 0% of 636 companies in the Semiconductors industry. The esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five, indicating Intel Corp's potential challenges in handling its interest expenses on outstanding debt.
The company's Altman Z-Score is just 2.17, which is below the safe threshold of 2.99, and its low cash-to-debt ratio at 0.51 indicates a struggle in handling existing debt levels. Moreover, the company's debt-to-Ebitda ratio is 5.88, which is above Joel Tillinghast's warning level of 4 and is worse than 84.74% of 629 companies in the Semiconductors industry.
Growth Prospects
A lack of significant growth is another area where Intel Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -1.7% per year over the past three years, which underperforms worse than 79.47% of 872 companies in the Semiconductors industry. Over the past five years, Intel Corp has witnessed a decline in its EBITDA, with a three-year growth rate at -13.2% and a five-year growth rate at -0.3%. Lastly, Intel Corp's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering Intel Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and consider these factors when evaluating the company's future prospects. For those seeking more robust investment opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
