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    Intel Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -9.23

    Market price

    USD 108.60

    Implied upside

    -108.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 39.9% of revenue against depreciation of 20.5%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Current EV/EBITDA of 49.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD -9.23-108.5%
    Exit multiple
    USD 8.76-91.9%
    Market price
    USD 108.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -10385387940-51926939700FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 49.8bnUSD 47.0bnUSD 44.3bnUSD 41.8bnUSD 39.4bn-5.7%
    EBITUSD -641.3mUSD -604.7mUSD -570.1mUSD -537.6mUSD -506.9m+5.7%
    NOPATUSD -506.6mUSD -477.7mUSD -450.4mUSD -424.7mUSD -400.4m+5.7%
    Add depreciation & amortisationUSD 10.2bnUSD 9.6bnUSD 9.1bnUSD 8.6bnUSD 8.1bn-5.7%
    Less capital expenditureUSD -19.9bnUSD -18.8bnUSD -17.7bnUSD -16.7bnUSD -15.7bn-5.7%
    Less increase in working capitalUSD -194.7mUSD -183.5mUSD -173.1mUSD -163.2mUSD -153.8m-5.7%
    Free cashflow to firmUSD -10.4bnUSD -9.8bnUSD -9.2bnUSD -8.7bnUSD -8.2bn+5.7%
    Discount factor0.93580.81940.71750.62830.5501-
    Present valueUSD -9.7bnUSD -8.0bnUSD -6.6bnUSD -5.5bnUSD -4.5bn+17.4%
    Present Value Of The ForecastUSD -34.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.825Reported 2.231, pulled toward 1.0 (Blume)
    Cost of equity15.03%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 574.1bn92.5% of capital
    Total debtUSD 46.6bn7.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC14.20%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -9.23

    -5% of EV

    Forecast FCFF, final year
    USD -8.2bn
    Capex at depreciation, working capital in reinvestment
    USD 435.4m
    Less reinvestment at g/ROIC (17.6% of NOPAT)
    USD -76.6m
    Capitalised
    USD 358.8m
    ROIC (WACC floor)
    14.2%
    Terminal value, undiscounted
    USD 3.1bn
    Terminal value, discounted
    USD 1.7bn
    Enterprise value
    USD -32.6bn
    Less net debt
    USD 9.2bn
    Equity value
    USD -41.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 8.76

    170% of EV

    Terminal value, undiscounted
    USD 151.3bn
    Terminal value, discounted
    USD 83.2bn
    Enterprise value
    USD 48.9bn
    Less net debt
    USD 9.2bn
    Equity value
    USD 39.7bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    12.20%-9.42-9.42-9.42-9.42-9.41
    13.20%-9.33-9.33-9.32-9.32-9.32
    14.20%-9.23-9.23-9.23-9.22-9.22
    15.20%-9.13-9.13-9.13-9.12-9.12
    16.20%-9.03-9.03-9.03-9.02-9.02

    Outlined: this model. Green text: above today's price of 108.60. Shading: distance from this model's own value.

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    Yahoo Finance and RBA data. General information, not advice. Methodology.