Stock Analysis on Net

Intel Corp. (NASDAQ:INTC)

Present Value of Free Cash Flow to Equity (FCFE) 

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Intrinsic Stock Value (Valuation Summary)

Intel Corp., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 13.86%
01 FCFE0 -7,255
1 FCFE1 = -7,255 × (1 + 0.00%)
2 FCFE2 = × (1 + 0.00%)
3 FCFE3 = × (1 + 0.00%)
4 FCFE4 = × (1 + 0.00%)
5 FCFE5 = × (1 + 0.00%)
5 Terminal value (TV5) = × (1 + 0.00%) ÷ (13.86%0.00%)
Intrinsic value of Intel Corp. common stock
 
Intrinsic value of Intel Corp. common stock (per share) $—
Current share price $42.64

Based on: 10-K (reporting date: 2023-12-30).

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.


Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.53%
Expected rate of return on market portfolio2 E(RM) 13.63%
Systematic risk of Intel Corp. common stock βINTC 1.03
 
Required rate of return on Intel Corp. common stock3 rINTC 13.86%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rINTC = RF + βINTC [E(RM) – RF]
= 4.53% + 1.03 [13.63%4.53%]
= 13.86%


FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Intel Corp., PRAT model

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Average Dec 30, 2023 Dec 31, 2022 Dec 25, 2021 Dec 26, 2020 Dec 28, 2019
Selected Financial Data (US$ in millions)
Cash dividends declared 3,088 5,997 5,644 5,568 5,578
Net income attributable to Intel 1,689 8,014 19,868 20,899 21,048
Net revenue 54,228 63,054 79,024 77,867 71,965
Total assets 191,572 182,103 168,406 153,091 136,524
Total Intel stockholders’ equity 105,590 101,423 95,391 81,038 77,504
Financial Ratios
Retention rate1 -0.83 0.25 0.72 0.73 0.73
Profit margin2 3.11% 12.71% 25.14% 26.84% 29.25%
Asset turnover3 0.28 0.35 0.47 0.51 0.53
Financial leverage4 1.81 1.80 1.77 1.89 1.76
Averages
Retention rate 0.32
Profit margin 19.41%
Asset turnover 0.43
Financial leverage 1.81
 
FCFE growth rate (g)5 0.00%

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

2023 Calculations

1 Retention rate = (Net income attributable to Intel – Cash dividends declared) ÷ Net income attributable to Intel
= (1,6893,088) ÷ 1,689
= -0.83

2 Profit margin = 100 × Net income attributable to Intel ÷ Net revenue
= 100 × 1,689 ÷ 54,228
= 3.11%

3 Asset turnover = Net revenue ÷ Total assets
= 54,228 ÷ 191,572
= 0.28

4 Financial leverage = Total assets ÷ Total Intel stockholders’ equity
= 191,572 ÷ 105,590
= 1.81

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.32 × 19.41% × 0.43 × 1.81
= 0.00%


FCFE growth rate (g) forecast

Intel Corp., H-model

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Year Value gt
1 g1 0.00%
2 g2 0.00%
3 g3 0.00%
4 g4 0.00%
5 and thereafter g5 0.00%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (2 – 1) ÷ (5 – 1)
= 0.00%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (3 – 1) ÷ (5 – 1)
= 0.00%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (4 – 1) ÷ (5 – 1)
= 0.00%