Barron’s Nov 6, 2017 recommended Intel. Here is my preliminary take on this.
- My overall conviction: wait for price to dip below $40 (DCF price is $45.4)
- Valuation: fair priced at DCF, over priced at FCF, low PE (15.90 vs industrial median 22.9, low EV/EBITDA (50% up potential)
- Financial strength: strong 7/10, long term debt is increasing maybe due to acquisition
- Profitability & growth: very good, overall oper margin and profit margin is high double digit, ROE% is 20.63%, demonstrates strong moat
- Ratios: valuation ratio low EV/EBITDA = 8.30 vs industry median 12.90, however PEG ratio is 12.31 which is high due to low 5 year EPS growth rate 1.3%
- insider trades: no insider buy, only sell
- possible catalysts:
AI: R&D development and recent acquisition of high-growth ventures like Mobieye, Nervana, Movidius will jump start AI technology and high growth for revenue and earnings (like Nvidia and AMD). AI favor might be the tailwind for Intel. – need to study more on this subject
