Linked here is a PDF copy of my analysis of Intel Corporation (INTC). Below are some highlights from the above linked analysis:
Company Description: Intel Corporation engages in the manufacture and sale of semiconductor chips, as well as in the development of advanced integrated digital technology platforms for the computing and communications industries worldwide.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
- Avg. High Yield Price
- 20-Year DCF Price
- Avg. P/E Price
- Graham Number
Dividend Analytical Data: In this section I consider five factors, see page 2 of the linked PDF for a detailed description:
- Rolling 4-yr Div. > 15%
- Dividend Growth Rate
- Years of Div. Growth
- 1-Yr. > 5-Yr Growth
- Payout 15% of avg.
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
- NPV MMA Diff.
- Years to >MMA
Other: INTC is a member of the S&P 500. INTC's results reflect the cyclical nature of the semiconductor industry and demand trends for personal computers. Historically, INTC shares have experienced high share price volatility. The company has a strong balance sheet including low debt levels compared to peers. In the future, INTC has the opportunity to realize marketshare gains and margin expansion. Future growth is available from new offerings, such as its Atom processor and planned graphics processor unit.
Conclusion: INTC earned one Star in the Fair Value section, earned one Star in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a net+ total of three Stars. This quantitatively ranks INTC as a 3 Star-Hold.
Using my D4L-PreScreen.xls model, I determined the share price could increase to $26.74 before INTC's NPV MMA Diff. decreases to the $10,000 NPV MMA Diff. that I like to see. At that price INTC would yield 2.05%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the $10,000 NPV MMA Differential I'm looking for, the calculated rate is 12.9%. This dividend growth rate is well below the 17.0% used in this analysis, thus providing a good margin of safety.
I last reviewed INTC on 1/29/2008. At that time, it was yielding 2.47%, trading at $20 and was ranked as a 1 Star-Weak stock. Now with a 3% yield, INTC seems to be attractively priced at $17.31. I would be very comfortable initiating a position in INTC below $21.21.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I had no position in INTC. However, subsequent to the original post on The DIV-Net, I initiated a position in INTC. (1.2% of my Income Portfolio) .
What are your thoughts on INTC?