Wednesday, March 29, 2006

Intel Corp; INTC March 29, 2006

Price per share: $19.60
Market Cap (intraday): 115.10B
Enterprise Value (29-Mar-06)3: 105.84B
Trailing P/E (ttm, intraday): 13.96
Forward P/E (fye 31-Dec-07) 1: 15.41
PEG Ratio (5 yr expected): 1.24
Price/Sales (ttm): 2.97
Price/Book (mrq): 3.20
Enterprise Value/Revenue (ttm)3: 2.73
Enterprise Value/EBITDA (ttm)3: 6.29

Profit Margin (ttm): 22.32%
Operating Margin (ttm): 31.50%

Return on Assets (ttm): 15.85%
Return on Equity (ttm): 23.18%


Total Cash / Investments = $12.77B
Total Liabilities = $12.1B (including Account Payable)

Enterprise Value (EV)
= Market Cap + Total Liabilities – Total Cash/Investments
= $115.1B + $12.1B - $12.77B
= $114.43B

Free Cash Flow (FCF)
= Total Operating Cash Flow – Capital Expenditure
= $14.8B – $5.82B
= $8.98B

FCF/EV yield
= $8.98B / $114.43B
= 7.85%

Treasury yield (30-years)
= 4.56%

Why is Intel Corp a good buy now?

As a value investor, we only invest when there is margin of safety. At current price, Intel Corp has a great FCF/EV yield; 7.85%. This is much better than the treasury yield of 4.56%.

As a Buffettised / Greenblattised value investor, we want to invest in strong, dominant company with moat. Without doubt, Intel Corp is a strong, dominant company with superior long-term results.

Strong managements are vital for superior returns. By looking at how management deploy excessive cash, we see that Intel has a great management. It has been repurchasing its own shares like crazy. Last year (2005), Intel repurchased over $9.4B of shares, more than its net income. On top of that, Intel has been paying out over $1.9B of dividend.


At current attractive yield, we are confident that Intel Corp is undervalued, and it is an attractive investment. We should be seeing more superinvestors investing in this wonderful stock soon.

All the best,
Dah Hui Lau (David)

To visit my archive:

1 comment:

OceanBlue said...

Good effort David. In your opinion, what's the moat of Intel?