Intel Corporation (INTC)

Discount cash flow analysis

Sell Overvalued by 51.8%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Intel Corporation, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $18.08 $17.86 $17.64
Terminal Growth% 0 $18.14 $17.92 $17.71
  +1% $18.21 $17.99 $17.77

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $33.62 (overvalued by 9.48%) - 12 months ago
  • RichC created a new valuation of $26.26 (undervalued by 17.39%) - 6 years ago
  • ChannelIslands created a new valuation of $18.45 (overvalued by 10.74%) - over 7 years ago
  • ChannelIslands created a new valuation of $19.53 (overvalued by 9.58%) - over 7 years ago
  • GordonGekko created a new valuation of $22.22 (undervalued by 6.11%) - over 7 years ago
  • chmakar created a new valuation of $3.33 (overvalued by 84.1%) - over 7 years ago
  • apc1015 created a new valuation of $15.97 (overvalued by 19.67%) - almost 8 years ago
  • apc1015 created a new valuation of $15.97 (overvalued by 19.67%) - almost 8 years ago
  • apc1015 created a new valuation of $16.15 (overvalued by 18.76%) - almost 8 years ago
  • tweakedmelon created a new valuation of $18.17 (overvalued by 3.3%) - 8 years ago
  • SethWellbourne created a new valuation of $13.78 (overvalued by 8.13%) - over 8 years ago
  • SethWellbourne created a new valuation of $16.68 (undervalued by 13.32%) - over 8 years ago
  • afi created a new valuation of $17.58 (undervalued by 19.59%) - over 8 years ago
  • TheCrunchBlog created a new valuation of $17.92 (undervalued by 12.49%) - almost 9 years ago
  • DharmaWarrior created a new valuation of $24.80 (undervalued by 33.69%) - 9 years ago
  • acoy created a new valuation of $22.27 (overvalued by 2.15%) - over 9 years ago

Comments

Running The Numbers – Intel ($INTC) trading below our estimated intrinsic value

This valuation is part of this blog post:

http://blog.valuecruncher.com/2008/10/running-the-numbers-intel-intc-trading-below-our-estimated-intrinsic-value/

Assumptions

In 2007 $INTC had revenues of US$38.3 billion and an EBITDA margin (profits) of 35.27%. Reuters aggregates 35 analysts covering $INTC and these have mean estimates of 2009 and 2010 revenues of US$39.9 and US$42.8 billion respectively. For our analysis we have used US$39.5 billion in 2008, US$41.5 billion in 2009 and US$43.0 billion in 2010. We have forecast EBITDA margins remaining flat at 35% to 2010. We have estimated capital expenditure in the US$4.95-5.35 billion range. All of these assumptions can be amended in the Valuecruncher on-line valuation model to adjust the valuation.

Other Model Assumptions:

Discount Rate: 11.0%. We believe the discount rate is in the 9-11% range. We have used the upper end of this range to reflect the deteriorating market conditions that $INTC have signalled.

Terminal Growth Rate: 3.5%. The US economy grew at an average of 3.6% over the last five-years. We have $INTC growing at around that rate in the long-term.

By TheCrunchBlog, almost 9 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 195,560
Net Debt (Long-term borrowings less cash): -13,241
Equity Value: 89,558
Number of Shares Outstanding: 5,622,000,000
Calculated value per share: $17.92

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.