INTC Investment Analysis Report & Stock Research, Intel Corp.

Ockham's Rating/Recommendation Summary

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INTC Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at INTC through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 5.46x and 3.03x respectively.

Utilizing this range we can see that INTC’s current Price to Sales per share ratio of 3.34x is significantly below its average levels historically. In fact, with a current price of $21.27, INTC is a full 22% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for INTC.

INTC Cash Earnings

As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of INTC, Ockham views their current Cash Earnings as below its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from INTC. For example, INTC's Cash Earnings ratio per share has fluctuated between 9.98 and 18.01 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where INTC is with respect to prior business periods.

With a historical average Cash Earnings ratio of 14.00, the current Cash Earnings ratio of 12.44 is a positive opportunity for value in the Ockham view. Naturally, we would love to see a deeper value opportunity for INTC, but to get there one of two things must occur (or both). Either the stock price must decline further to increase the long term buying opportunity, or the management at INTC needs to earn more cash. If either, or both, of these occur, then we could see a significant gap emerge between what investors were willing to pay for in the past, and where INTC is trading currently (latest close price of $21.27).

INTC Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.

When reviewing dividend yields for INTC, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. INTC’s estimated annual dividend is $0.63 resulting in a current dividend yield of 2.96%. The highest dividend yield from INTC over recent history was 4.66% while the lowest dividend yield was 0.21%. INTC’s current dividend yield is therefore significantly higher than its median dividend yield historically. In fact, the current yield is 21.56% above the median which weighs very positively on our analysis of INTC.