Thursday 30 April 2020

Analysis of Intel 2020

Company: Intel 

ISIN US4581401001 | WKN 855681 

Business: An American hardware producer (mainly processor). They have larger units Data-Centric and PC-Centric with the segments:  Data Centric Group, Internet of Things Group, Mobileye, Memory Business, Programmable Solutions Group, Client Centric Group.

Active: Products are sold world wide. 

P/E: 12.6

To find out more concerning Intel then please go to Analysis of Intel 2018.

The P/E of Intel is very low with 12.6 but the P/B is up at 3.4 which means that the company would be a no go for Graham. The earnings to sales are excellent with 29% as is the ROE with 27%. The book to debt ratio is still good with 1.3.

In the last five years they have managed to have a yearly revenue growth rate of 5.4% which I find very good and this gives us a motivated P/E of between 115 to 19. This means that Intel is today undervalued  by the stock market today. They only paid 12.5% in taxes which is ridiculously low.

To stay on top of things they spend a lot of money on R&D to the size of 63% of their earnings which I find reasonable.

They pay a small dividend of 2.0% which correspond to 26% of their earnings and clearly there is room for improvement with yearly increases as they have been doing in the past.

Future: Chips are here to stay. Competitors have arrived and gone and they did make a business opportunity losses in the mobile and tablet market to ARM but what followed in the wake of all these low storage units was cloud servers and there Intel has been standing on very firm ground.

Conclusion: Graham says no but I would say yes to Intel. However due to my fairly significant holding in Intel which is not based on the size of my initial investment but based on the development of Intel and the share price increase that has followed I am personally no longer interested in increasing my holding but I will just watch it grow and count my blessings for stepping in at a good point in time for Intel. 

No comments: