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Intel Corp: cash flow valuation update

|Includes: Intel Corporation (INTC)
Current Price: ~ $22/share
Projected Yield: ~ 3.81%
 
 
Intel is the largest chipmaker in the world. It develops and manufactures microprocessors and platform solutions for the global personal computer market. Intel pioneered the x86 architecture for microprocessors.
 
I estimated the firm's WACC today at 10.32% using the Capital Asset Pricing Model and the company's recent SEC filings.
 
Recent free cash flows and growth rates:
Year
FCF $Millions
2001
1345
2002
4426
2003
7859
2004
9276
2005
9005
2006
4841
2007
7625
2008
5729
2009
6655
2010
11485
TTM
8673
 
Average Annual Growth FCF: ~ 44%
CAGR FCF: ~ 27%
Consensus Forecast Industry 5-Year Growth: ~ 16% per year
Consensus Forecast Company 5-Year Growth: ~ 11% per year
 
Starting at $8673 million FCF, assuming the company achieves a 5-year growth rate in FCF of 11% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:
 
Discounted Cash Flow Valuation
Year
FCF $Millions
0
8673
1
9627
2
10686
3
11861
4
13166
5
14615
Terminal Value
157130
The firm's future cash flows, discounted at a WACC of 10.32%, give a present value for the entire firm (Debt + Equity) of $140,310 million. If the firm's fair value of debt is estimated at $7400 million, then the fair value of the firm's equity could be $132,910 million.  $132,910 million / 5250 million outstanding shares is approximately $25 per share and a 20% margin of safety is $20/share.
 
Sources
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate anypositions within the next 72 hours.