Thursday, January 22, 2015

Analysis of Intel 2015


Intel, an American processor and chip producer

Company: Intel

ISIN US4581401001 | WKN 855681

Business: An American hardware producer (mainly processor). They are divided into six segments: PC Client Group (which is the processor part), Data Center Group (which is server, workstations and storage platforms), Internet of Things (platforms designed for embedded market segments), Mobile and Communications Group (which include tablet, smartphone etc.), Software and Services (mainly being McAfee) and the final one is All Other (which mainly has to do with non-volatile memory solutions).

Active: Products are sold world wide.

P/E: 15.4

Here you can find the previous analysis of Intel 2014.

contrarian values of P/E, P/B, ROE as well as dividend for Intel

The P/E of Intel is a little too high with 15.4 and the P/B is equally a bit too high with 3.2 which gives us a clear no go from Graham. The earnings to sales are excellent with 21% and the ROE is also great with 21%! The book to debt ratio is excellent with 1.6.
In the last five years they have had a yearly revenue growth of 5.1% which is very good and this then gives us a motivated P/E of 16 to 19 which means that Intel is today fairly valued by the market.
The spend a big chunk of money on research and I even find it to be too much with 99% of their earnings being pushed into it.
They pay a small but acceptable dividend of 2.5% which represents only 38% of their earnings so they should at least be able to keep the dividend payments.

Conclusion: Graham says directly no to this one and since it is fairly valued by the market so do I. The P/E and P/B are a little too high and the dividend is too low. The ROE is however excellent and have even improved since last year! I see no reason to sell my shares since Intel is not yet overvalued but I will also not buy any more shares.

If this analysis is outdated then you can request a new one.

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