Intel Valuation

[ThetaMale]

This valuation is not my first valuation of Intel. This valuation also needs quite a bit of work. However, I can say that most of my valuations on Intel have ended around the 58-62 range. After making some adjustments, though, and trying to account for Intel's current plan, this is what I have my valuation at in 10 years. This screenshot of a sheet gives a short rundown of my model. I'll try to provide a full rundown on the model itself on a different company because this doesn't show the changes I set to revenue growth or operating margin. It also leaves out some changes I already started making to reinvestment, and I'll wager that there's quite a bit I'll need to change. This valuation will probably take a few weeks to a month to finish.

The most encouraging factors for me are the construction of their new plant. Intel fell behind in chip manufacturing, but in recent years they have been able to compete with AMD on processors. Most consumers are unaware that Intel's chips are slowly becoming competitive again. The construction of their new plant and a recent tour of one of their chip factories make me think they may have come up with an improved manufacturing process or are on the verge of doing so. They've also been spending more on R&D in recent years.

Intel's growth averages around 4% over the years, with a standard deviation of +/- 4.73%. For the most part, Intel's revenue growth is consistent yearly. I assume they will continue to lose money until 2025, when they complete their factory. Once they've completed the factory, I expect consistent revenue growth of 4.75%, slightly over their average.

There are a few things I need to tweak with this, such as Intel's reinvestment. They've stated they plan to invest 100 billion over the next decade with planned expansions of their chip factory in Ohio.

 

[LVRebel]

View attachment 127717
This valuation is not my first valuation of Intel. This valuation also needs quite a bit of work. However, I can say that most of my valuations on Intel have ended around the 58-62 range. After making some adjustments, though, and trying to account for Intel's current plan, this is what I have my valuation at in 10 years. This screenshot of a sheet gives a short rundown of my model. I'll try to provide a full rundown on the model itself on a different company because this doesn't show the changes I set to revenue growth or operating margin. It also leaves out some changes I already started making to reinvestment, and I'll wager that there's quite a bit I'll need to change. This valuation will probably take a few weeks to a month to finish.

The most encouraging factors for me are the construction of their new plant. Intel fell behind in chip manufacturing, but in recent years they have been able to compete with AMD on processors. Most consumers are unaware that Intel's chips are slowly becoming competitive again. The construction of their new plant and a recent tour of one of their chip factories make me think they may have come up with an improved manufacturing process or are on the verge of doing so. They've also been spending more on R&D in recent years.

Intel's growth averages around 4% over the years, with a standard deviation of +/- 4.73%. For the most part, Intel's revenue growth is consistent yearly. I assume they will continue to lose money until 2025, when they complete their factory. Once they've completed the factory, I expect consistent revenue growth of 4.75%, slightly over their average.

There are a few things I need to tweak with this, such as Intel's reinvestment. They've stated they plan to invest 100 billion over the next decade with planned expansions of their chip factory in Ohio.

Which new plant are you referring to? They've pretty much been building constantly for the past 7-10 years.

 

[ThetaMale]

Which new plant are you referring to? They've pretty much been building constantly for the past 7-10 years.

Ohio

 

[LVRebel]

Ohio

Got it. They've been growing the one up in OR forever, as well as in AZ. Not to mention the overseas expansion underway

 

[quickfeet]

Side note: I bet chip companies located in the US are going to receive massive subsidies going forward

 

[VosFrost]

Soooooo should I buy or not

 

[quickfeet]

What are you trying to show with the table? Are you projecting current trends?

i assume what we are doing here is to try and find stocks for a good value.

How do the metrics for picking a value stock differ from a valuation? I guess we are trying to find stocks that are more valuable than their current price.

what metrics in the table are backing up your valuation?

From my small bit knowledge of evaluating value stocks, you look at price to book, price to earnings (which most recommend price to ebitda now but I have fully wrapped my head around that yet). And then when looking at the financials you make sure there is not a ton of long term debt relative to the assets of the company

 

[VosFrost]

What are you trying to show with the table? Are you projecting current trends?

i assume what we are doing here is to try and find stocks for a good value.

How do the metrics for picking a value stock differ from a valuation? I guess we are trying to find stocks that are more valuable than their current price.

what metrics in the table are backing up your valuation?

From my small bit knowledge of evaluating value stocks, you look at price to book, price to earnings (which most recommend price to ebitda now but I have fully wrapped my head around that yet). And then when looking at the financials you make sure there is not a ton of long term debt relative to the assets of the company

But even with all of that data, it’s already priced into the stock, IMO.

 

[quickfeet]

But even with all of that data, it’s already priced into the stock, IMO.

Yeah, for the most part, and that is going to be the case for almost any stock.

You almost have to drill down into the very small caps to see if you can dig up an advantage

 

[ThetaMale]

What are you trying to show with the table? Are you projecting current trends?

So all I'm trying to show with that chart is a general overview of my expectations. That table has a lot more meaning at the end of the valuation. I actually can't show you how I expect trends to change and where with that table because it breaks it up into 1-5, 6-10. Starting in year 6, I usually begin to reduce revenue growth because that's what generally happens over the life of companies. I do that because companies' general life cycle is growth than decline.

My goal by essentially reducing the company's profitability in those future years is to try and capture this effect.

what metrics in the table are backing up your valuation?

I think this will help answer your question.

This table is where everything that I've gathered finally gets processed. The numbers I use for companies differ, but my goal is to find cash flows. I'm looking for the company's cash flows and for anything that may be a liability to those cash flows. So this table is fed in information from several different tables, and the tables that feed into it differ. The numbers in those tables vary. Throughout the life of these threads, my goal is to try and give an idea of what those numbers used are.


This is an input sheet that I always fill out, though. I always add the cash and any marketable securities the company has. There are some extra items I might add in, like with Encore Capital Group, I accounted for all of their secured debt, and I didn't add in unsecured debt. With Intel, I subtracted their old inventory because I don't think obsolete technology holds much value, and the longer they hold it, the more holding costs they incur.

 

[VosFrost]

I love it Op and appreciate the insight. But what’s our goal here, to analyze attractive buy, sell and short opportunities?

 

[ThetaMale]

I love it Op and appreciate the insight. But what’s our goal here, to analyze attractive buy, sell and short opportunities?

My goal with these threads is to improve my stock picking. The criteria I use to help me decide what to pick are still a bit abstract. I started looking at Intel as a value play. There are some other companies that I'm looking for deep value plays.

The deep value plays are companies that are being run poorly but need only minor changes to become successful. The idea behind these plays is to buy long-term options on stocks the market thinks will go out of business, but the actual odds are low. That was my idea behind GoPro.

 

[ThetaMale]

But even with all of that data, it’s already priced into the stock, IMO.

I used to think this, but I'm not so sure. I think the market has inefficiencies in it. Otherwise, I'm not sure how traders and investors would make money in it.

Many people are talking about how Intel can't catch up to other chip manufacturers, which makes absolutely NO sense to me. They are a global powerhouse in chip manufacturing. They are becoming more competitive in CPUs. They have other revenue streams outside of just chip manufacturing. They are investing HEAVILY in the company. They are profitable. The company would have to make some terrible decisions for a consistent time for me to think they were going out of business.

I have a buy order for 25 dollars for company shares, which I never thought I'd hit, but it's looking like I might get that. This company is so fucking undervalued it's not even funny. I'm not very good at stock picking, but I keep up with technology and know a little about business. Intel is not a dying company and is making good decisions right now, and in my mind, any slowdowns they have faced recently are due to economic conditions. They are behind in the GPU market, but I believe they can innovate and catch up with enough time.

 

[ThetaMale]

TLDR: Intell is having trouble staying competitive with AMD, NVDA, and TSCM. However, they still have cash flows from their board, CPU, and other sales. So I still think that long term, Intel has the opportunity to turn things around and regain its dominance in the chip manufacturing market. My previous expectation was that they might turn around when their chip factories were complete, but it could take longer for their value to be realized. As a result, their price could diverge from their actual value for quite a while. But when Intel turns things around, I expect a massive turnaround in their stock price.

Edit: At this time, there are several massive barriers to entry within the chip manufacturing space. To consider abandoning Intel, I would need to see more chip manufacturers entering the space. A large part of what makes this so attractive to me is that it's so difficult to actually get started within the chip manufacturing industry because of specialized knowledge and capital cost.

 

[BigBucnNole]

View attachment 127717
This valuation is not my first valuation of Intel. This valuation also needs quite a bit of work. However, I can say that most of my valuations on Intel have ended around the 58-62 range. After making some adjustments, though, and trying to account for Intel's current plan, this is what I have my valuation at in 10 years. This screenshot of a sheet gives a short rundown of my model. I'll try to provide a full rundown on the model itself on a different company because this doesn't show the changes I set to revenue growth or operating margin. It also leaves out some changes I already started making to reinvestment, and I'll wager that there's quite a bit I'll need to change. This valuation will probably take a few weeks to a month to finish.

The most encouraging factors for me are the construction of their new plant. Intel fell behind in chip manufacturing, but in recent years they have been able to compete with AMD on processors. Most consumers are unaware that Intel's chips are slowly becoming competitive again. The construction of their new plant and a recent tour of one of their chip factories make me think they may have come up with an improved manufacturing process or are on the verge of doing so. They've also been spending more on R&D in recent years.

Intel's growth averages around 4% over the years, with a standard deviation of +/- 4.73%. For the most part, Intel's revenue growth is consistent yearly. I assume they will continue to lose money until 2025, when they complete their factory. Once they've completed the factory, I expect consistent revenue growth of 4.75%, slightly over their average.

There are a few things I need to tweak with this, such as Intel's reinvestment. They've stated they plan to invest 100 billion over the next decade with planned expansions of their chip factory in Ohio.

How old are you?

 

[ThetaMale]

How old are you?

I'm in my 30s