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QuestionsCategory: Investor PsychologyIntel’s valuation
Theodore Tan asked 1 year ago

Hi Victor and team,
Base on https://secure.fundsupermart.com/fsm/stocks/factsheet/NASDAQ.INTC/Intel-Corp
I calculate Intel’s instrinsic based on 2019 annual figures to be
Average P/E (5 Years): 13.73
Average EPS : 3.48
Net Debt Per Share  = (Total liability РCash)/ Outstanding shares

(58,865.00 -13273) /4473

Instrinsic value = 13.73*3.48 -10.22 = 37 USD approximately
Even with Intel @ USD 49, it seems like there is -32% margin of safety.
Is this correct?
 

1 Answers
Victor Chng answered 1 year ago

Hi Theodore,

For the net debt per share calculation is debt minus cash not total liability minus cash.

As for the calculation of IV of Intel, for US company, you does not need to use net debt or net cash. It is usually applicable to Asian company as they hold a lot of cash. My suggestion is you just have to take average PE multiply by their 5 years average EPS to compute the IV.

For intel case, you should take their average 10 years PE instead of their average 5 years. The average 10 years PE for intel is about 13.6x which is close to your average 5 years. Hence, in this case the IV for Intel should be $47.3 (3.48 x 13.6).

Theodore Tan replied 1 year ago

Thanks Victor!

Victor Chng replied 1 year ago

Welcome :)