Should you buy Intel stock?
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Intel stock analysis. Two minute analysis INTC stock..
Over the last decade, Intel had steady growth of revenue of roughly 5% per year. But revenue dropped 20% in 2022 lead by poor sales of PC and server chips and higher competition.
Every quarter of 2022 brought a decline in revenue versus the same quarter in 2021:
Q1: -6.7%
Q2: -22.0%
Q3: -20.1%
Q4: -31.6%
This is also reflected in the share price which is down roughly 50%.
Intel has responded to this trouble in 3 main ways.
1. It’s cut its dividend by 66% to just 13 cents.
2. It’s cutting costs. Even the CEO’s salary has been reduced by 25%.
3. It’s reinvesting any excess cash into areas that will lead to the creation of long-term value
Making the decision to cut dividends is a tough one, but its necessary when considering the slowdown in growth and the significant debt pile.
Gross profit margin reduced from 55% to 43% in 2022 and gross profit dropped to $26,8 billion in vs. $43,8 billion in 2021. If we exclude the restructuring expenses that the company had (as they’re not recurring), there are two main types of expenses that the company incurs:
- Research and development – that increased to $17,5 billion in 2022 (vs. $15,2 billion in 2021)
- And Marketing, general and administrative – that increased to $7 billion in 2022 (vs. 6,5 billion in 2021)
This leads to an operating profit of only $2,3 billion (vs. 22,1 billion in 2021).
So what we’re looking at is a decrease in demand for Intel’s products combined with high inflation having an impact on the company’s fixed costs.
#stocks #investing #overlookedalpha
Intel stock analysis. Two minute analysis INTC stock..
Over the last decade, Intel had steady growth of revenue of roughly 5% per year. But revenue dropped 20% in 2022 lead by poor sales of PC and server chips and higher competition.
Every quarter of 2022 brought a decline in revenue versus the same quarter in 2021:
Q1: -6.7%
Q2: -22.0%
Q3: -20.1%
Q4: -31.6%
This is also reflected in the share price which is down roughly 50%.
Intel has responded to this trouble in 3 main ways.
1. It’s cut its dividend by 66% to just 13 cents.
2. It’s cutting costs. Even the CEO’s salary has been reduced by 25%.
3. It’s reinvesting any excess cash into areas that will lead to the creation of long-term value
Making the decision to cut dividends is a tough one, but its necessary when considering the slowdown in growth and the significant debt pile.
Gross profit margin reduced from 55% to 43% in 2022 and gross profit dropped to $26,8 billion in vs. $43,8 billion in 2021. If we exclude the restructuring expenses that the company had (as they’re not recurring), there are two main types of expenses that the company incurs:
- Research and development – that increased to $17,5 billion in 2022 (vs. $15,2 billion in 2021)
- And Marketing, general and administrative – that increased to $7 billion in 2022 (vs. 6,5 billion in 2021)
This leads to an operating profit of only $2,3 billion (vs. 22,1 billion in 2021).
So what we’re looking at is a decrease in demand for Intel’s products combined with high inflation having an impact on the company’s fixed costs.
#stocks #investing #overlookedalpha
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NewsTranscript
00:00 Should you buy Intel stock?
00:02 At a price just under $26, Intel has a market cap of $106.5 billion.
00:07 With $11 billion of cash and $38 billion of long term debt, the enterprise value is roughly
00:12 $133 billion.
00:14 Meanwhile revenue over the last 12 months is $63 billion, net income is $8 billion and
00:19 free cash flow is -$9.6 billion.
00:22 That means the company is valued at around 2 times revenue or 13 times earnings, which
00:27 is not too expensive.
00:29 Over the last decade Intel had steady growth of revenue of roughly 5% per year, but revenue
00:34 dropped 20% in 2022 led by poor sales of PC and server chips and higher competition.
00:41 Every quarter of 2022 brought a decline in revenue versus the same quarter in 2021.
00:47 And this is also reflected in the share price which dropped roughly 50%.
00:51 Intel has responded to this trouble in 3 main ways.
00:54 1. It's cut its dividend by 66% to just $0.13 2. It's cutting costs, even the CEO's
01:01 salary has been reduced by 25% 3. It's reinvesting any excess cash into
01:06 areas that will lead to the creation of long term value.
01:10 Making the decision to cut dividends is a tough one but it's necessary when considering
01:14 the slowdown in growth and the significant debt pile.
01:17 Gross profit margin reduced from 55% to 43% in 2022 and gross profit dropped to $26.8
01:25 billion versus $43.8 billion in 2021.
01:29 This leads us to an operating profit of only $2.3 billion versus $22.1 billion in 2021.
01:35 So what we're looking at is a decrease in demand for Intel's products combined with
01:39 high inflation having an impact on the company's fixed costs.
01:43 Looking at this chart you can see that Intel is still an important and dominant player
01:47 in the CPU market but what's worrying is that the market share here has dropped 10%
01:51 in just 12 months. If that trend continues Intel's stock has the potential to go a
01:56 lot lower.
01:57 Right now a market cap of $106 billion is pricing in around 10% earnings growth a year
02:03 but that doesn't seem likely based on current trends and the level of debt is also a bit
02:07 of a concern.
02:08 We need to see the company stabilise before considering the stock and that's why I give
02:11 the stock a neutral rating. But these are my personal opinions not financial advice
02:15 and I've got no position in Intel stock. For more detailed investing ideas visit our
02:20 website overlookedalpha.com