Tuesday, 24 April 2018

Analysis of Intel 2018

Company: Intel 

ISIN US4581401001 | WKN 855681 

Business: An American hardware producer (mainly processor). The segments that they present are: Client Computing Group, Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group and finally Programmable Solutions Group.

Active: Products are sold world wide. 

P/E: 25.2

To find out more concerning Intel then please go to analysis of Intel 2017.

Contrarian analysis of Intel 2018 with P/E, P/B, ROE as well as dividend.

The P/E of Intel is pretty high with 25.2 as is the P/B with 3.5 which means that the company would be of no interest to Graham. The earnings to sales are ok with 15% but the ROE is on the low side with only 13.9%. The book to debt ratio is however good with 1.3.
In the last five years they have managed to have a yearly revenue growth rate of 3.6% which I find acceptable and this gives us a motivated P/E of between 13 to 16. This means that Intel is overvalued by the stock market today however without the large tax then they would have fallen within this region.
To stay on top of things they spend a lot of money on R&D to the size of almost 140% of their earnings which I find to be a lot but at the same time gives assurance that they will catch up to or even surpass their competitors.
They pay a small dividend of 2.1% which correspond to 53% of their earnings which I find acceptable once again considering the tax payment.

Conclusion: Graham says no and so do I. The P/E and P&B is too high, the ROE too low as is the dividends. I will remain as a shareholder but I consider Intel to be fairly valued at the moment and I will not increase my holding.

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