Intel DCF Analysis - Intrinsic Value

If you are interested, I have recently completed a DCF model for Intel.

The base case scenario shows an average intrinsic value of $69.75.
DCF (5y) EBITDA Exit = $77.37
DCF (5y) Perpetual Growth = $62.15

I would be interested to hear your thoughts and if anyone else has completed a DCF model for Intel recently.

You can see my full Intel Valuation Analysis and model here:
IS INTEL A GOOD INVESTMENT? | Bull Headed Bear (bull-headed-bear.com)

NOTE: NOT Investment Advice - Sharing personal analysis based on personal assumptions.

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Thank you. As Intel is one of my largest and longest-held investments I am pleased to see you concluding that it may be attractive. My basis cost is $3.85 per share. Intel has been providing me with nice dividend income for many years.

Thanks Richard. That is a nice cost basis!

This is why I started buyng INTC:

  • Price < (Intrinsic Value - 20%).
  • Good P/E.
  • Good D/E (less than the sector average).
  • Good dividend (> 3%).
  • The CEO worked 30 years in Intel and want to invest in new technologies.
  • Between -1B$ an -2B$ cash flow in 2022 due to new investments (this means INTC could be cheaper in the future).
  • 5M$ stocks bought by insiders (directors and CEO) between october and november 2021 and 750K$ in february. Good.

I think this is all. I’m new in value investing and I have not calculated anything else.

CEO’s LinkedIn = https://www.linkedin.com/in/patgelsinger/
Insider’s transactions = INTC - Intel Corp - SEC Form 4 Insider Trading Screener - OpenInsider

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I recently created a video that takes you through my updated DCF model for Intel. My model was updated to consider the more recent management guidance and analysts’ projections. I also increased CAPEX spending and lowered the EV/EBITDA multiple. It resulted in the base case intrinsic value being $49.38, which is a decent reduction verse the output of the previous assumptions.

If you are interested in the details, see the video below. It shows the intrinsic value and IRR based on my assumptions. There is also scenario analysis covering the bear case and bull case.

I have just started sharing my models with the private investor community and am interested in hearing your “constructive” thoughts. :thinking: (I’m fully aware I have a mono-tone Yorkshire accent - I’m working on some improvements here :no_mouth:)

NOTE: Not investment advice - Sharing personal analysis based on personal assumptions.

I own INTC, but only a very small percentage, my cost average is $41.19.
Great P/E ratio Trailing P/E Ratio for chip companies 6.49; Forward P/E Ratio 11.29 better than AMD. One of few hi-tech companies that pays good dividend of about 3.93%

Analyst PT: High Prediction $72.00; Average Prediction $50.28 Low Prediction $30.00. About 29% Upside.

The main problem with this companies is that they are losing market shares to their competitors AMD, TSM, QCOM.

In the race toward 8nm chip about two years ago. they come almost at the bottom that is where they start losing their market shares to their competitors. You could easily observe it that Revenue and Growth Profits is not growing, Growth Margin Keep declining, Operating Cash flow is declining, Free Cash flow is declining enormously while CAPEX keeps increasing.
Theor managemnt is not that great for a tech companies, compare it AMD CEO Lisa Su.

Imo INTC is still a great company but in technologies business if you have lost the race against a new invention, you lost the moat that is where the problem will start emerging.

It´s even cheaper now.
So based on the same calculation (assuming it is correct) it should be even cheaper.
I´m not currently investing in Intel though. Maybe if it got even cheaper.

In 1990, 37% of the world’s semiconductors were made in the U.S., according to industry association Semi. Last year, U.S. market share was down to 12%, according to the association. The government is hoping to change that with the CHIPS Act, which includes a proposed $52 billion in subsidies for chip companies like Intel that commit to manufacturing in the U.S.

If and a big IF intel can catch up, there is a lot of opportunity in a growing market. There are not many players out there with the cashflows to catch up and/or overtake. If we seen further investment and a change in management style at Intel, then perhaps this could be an opportunistic time, and the potential upside enormous.

I agree and I also expect the USA subsidies for producers to build in the country will help them.

I managed to bring down my cost average. The problem with INTEL is that thy far behind the curve against TSM, AMD. and Samsung. TSM & Samsung have manufactured 3nm Chips.

At $26 that’s about same price range 10 years ago, fortunately i don’t own the stock