Company Overview: Intel Corporation, founded in 1968, is a technology giant headquartered in Santa Clara, California. It is renowned for its design and manufacturing of microprocessors, which are the brains behind most of the world’s personal computers and servers. Over the years, Intel has diversified its product portfolio, expanding into data centers, artificial intelligence (AI), autonomous driving, and more. However, the company has faced increased competition from rivals like AMD, NVIDIA, and new entrants in the semiconductor space.
Recent Developments: Intel has been under significant pressure recently, both operationally and legally. The company is currently embroiled in lawsuits from shareholders, accusing it of withholding crucial information before earnings releases that led to a sharp decline in stock value. Additionally, Intel faces a copyright infringement lawsuit from another company, further weighing on its reputation and financial stability.
Adding to these challenges, Intel suspended its dividend payments—a move that signals potential financial strain or a strategic decision to reinvest capital. The company’s credit rating was also downgraded, which could increase borrowing costs, affecting its ability to finance future growth or innovation.
Strengths:
- Legacy and Market Position: Intel has a strong brand and a significant presence in the semiconductor industry. It continues to lead in the production of x86 microprocessors, which are critical for PCs and data centers.
- Diversification: Intel has expanded beyond microprocessors into areas like AI, 5G, and autonomous vehicles, positioning itself for future technological trends. Its acquisition of Mobileye, a leader in autonomous driving technology, is a key part of this strategy.
- Research and Development (R&D): Intel’s substantial investment in R&D supports its innovation capabilities, keeping it at the forefront of technological advancements.
- Global Reach: Intel’s products are used worldwide, giving it a vast and diverse customer base, which reduces dependence on any single market or region.
Weaknesses:
- Competitive Pressure: Intel has been losing market share to AMD in the CPU market. AMD’s Ryzen and EPYC processors have gained popularity due to their superior performance and efficiency, particularly in the gaming and data center markets.
- Production Delays: Intel has faced significant delays in transitioning to smaller manufacturing processes (like 10nm and 7nm), while competitors like TSMC and Samsung have advanced, producing chips at 5nm and below.
- Legal and Financial Challenges: The current lawsuits, dividend suspension, and credit downgrade are significant red flags. These issues not only impact Intel’s financial health but also its ability to attract and retain investors.
- Supply Chain Vulnerabilities: As a global company, Intel is susceptible to supply chain disruptions, especially with the ongoing geopolitical tensions that can affect semiconductor production and distribution.
Technical Analysis: Intel’s stock has been underperforming compared to its peers. The stock has seen significant downward pressure due to the aforementioned issues. From a technical standpoint, the stock is trading below key moving averages, indicating a bearish trend.
- Support and Resistance: Intel’s stock might find support around previous lows, but any breach of these levels could lead to further declines. Resistance levels are likely to be encountered at previous highs and key moving averages (e.g., the 50-day and 200-day moving averages).
- RSI and MACD: The Relative Strength Index (RSI) is currently in oversold territory, which might suggest a potential short-term bounce. However, the Moving Average Convergence Divergence (MACD) indicator shows a bearish crossover, indicating continued downward momentum.
Conclusion for Long-Term Investors: Intel presents a mixed bag for long-term investors. While the company has strengths in its market position, diversification, and R&D capabilities, significant challenges lie ahead. The legal issues, competitive pressures, and financial concerns may weigh on the stock for the foreseeable future.
For investors considering a long-term position in Intel, it may be prudent to wait for more clarity on the legal and financial situations, as well as for potential stabilization in the stock price. Monitoring technical indicators and waiting for a more favorable entry point could also be wise. Alternatively, some investors might view the current downturn as an opportunity to buy into a historically strong company at a discount, provided they believe in Intel’s long-term strategy and ability to overcome its challenges.
Kept Easy is neither long nor short Intel, it was considering whether Intel was a possible target for buying shares. This blog is part of our analysis.
Kept Easy Quantitative Fundamental Analysis
*Mayer Performance Score = 1.625 out of 8
The Mayer Performance Score suggests the performance of the stock, its share price, is struggling and will continue to struggle.
**Grade Of Company = B- (B- is the 10th ranked grade and in the 4th tier)
Dividend Grade = Z
Strength Grade = A
Growth Grade = B
Health Grade = D+
Power Grade = Diamond Status
Risk Grade = Gold AA
Value Grade = A
The Kept Easy QFA grading system suggests Intel is not investable based on the numbers in the financial statements on overall grade. Kept Easy is not saying there is a problem with their accounting but that their economic performance and earnings reports are not scoring in the realm of investable.
Kept Easy requires an A- or better in order to invest based on Fundamentals and financial statements.
Closing Price August 9, 2024 $19.71
*** Stock Price Is Currently Fair
Fair Share Price High Range $19.92
Fair Share Price Low Range $14.06
The Kept Easy valuation score suggests that Intel is fairly priced fundamentally. This doesnt not take into account sentiment or news.
**** Price Forecast 1 = $38.73
Price Forecast 2 = $17.30
Price Forecast Combined = $25.32
The Kept Easy price forecast takes two different techniques into forecasting and combines them for a main number. The price forecast suggests Intel may have room to go up. The timeline of the forecast is 1 year out from the date of running the analysis. Therefore August 9, 2025 the analysis is showing the price will be $25.32. This calculation does not include any future events or news or changes that may happen.
Average Annual Gain Percent -12.24%
3 Year Annual Gain Percent -21.15%
5 Year Annual Gain Percent -11.56%
10 Year Annual Gain Percent -3.99%
15 Year Annual Gain Percent 0.12%
20 Year Annual Gain Percent -1.04%
Intels gain percent is negative nearly all ways to calculate. This shows the performance over the last 20 years on an annual basis from the date of running the analysis is terrible. While past performance is not an indication of the future, their annual gain percent over any time period does not instill confidence.
Periods Net Income Increased 2 out of 12
Periods Cash Increased 4 out of 12
Periods Revenue Increased 6 out of 12
Periods Gross Profit Increased 6 out of 12
Intel isnt showing the kind of increases in growth areas and sustainable fundamental areas we’d like to see.
What a Kept Easy Investor has to say…
Intel presents an interesting and often intriguing situation. Its currently being dragged through the mud. It has multiple lawsuits against it from shareholders to other companies who used to be partners. Their credit rating has been lowered and their stock is cratering. They had to suspend their dividend and are laying 15% of people off. It would be hard for things to get much worse for them. These can be amazing moments to find value and make investments especially in a long-term power name like Intel.
They have had numerous struggles in production and modernization to remain competitive for what seems like years and years. They are falling behind the competition and their product quality is lesser in the industries eyes than it seemingly ever has been.
This is happening to them during a time of massive booms and huge gargantuan price appreciation for their competitors. While Nvidia, Advanced Micro Devices, Taiwan Semi and more have skyrocketed their share price, Intel has gone the other way.
The industry is poised for long term growth and stability globally and it can be hard to find value anywhere else.
When you look at a chart you can see that it is at or below pre .com bubble burst price. That is over two decades ago. That is a troubling sign. Its currently in one of its worst month performance ever.
Intel has been under the 100 week moving average, not seen in the chart above, since July 2021. It is currently under its 10, 50 and 200 exponential and simple moving averages.
RSX / RSI is currently under 30, often a signal of being oversold. It can also highlight extremely poor sentiment and doesn’t always correlate to buying or the stock price going up.
If the dividend was still being paid and with the sentiment so bad and the fear of owning Intel and all the problems they have, Kept Easy would consider slowly putting some money into Intel to average into a position, being paid to wait while the company gets things together, which may or may not happen.
However with an Overall Grade of B-, below a grade that is green lighted for investment, and the lack of dividend, its awful annual gain percent, and its low Mayer Performance Score, Kept Easy feels there are better moves to make and other value to find.
FOOTNOTES
* The Mayer Performance Score is a proprietary scoring system created by Justin Mayer the Founder of Kept Easy. It is based on various factors that are tied into the performance of the stock. Its premise is to rank and compare companies on metrics that contribute to the price of the stock. It is meant to help find companies whos share price is likely to go up.
** QFA Company Grades = Diamond Status, Gold AAA, Gold AA, Gold A, A+, A, A-, B+, B, B-, C+, C, C-, D+, D, D-, F
The company grades are based on a combination of factors Dividend, Strength, Growth, Health, Power, Risk, Value. These contribute to the overall grade of the company. Each are proprietary algorithms based on the accounting books and public filed numbers of the company, except for Risk. Risk is calculated using Sustainalytics Home – Sustainalytics scores where an algorithm is applied to the combined scores of environmental, societal and governmental risk factors. It is important to note that the sentiment and macro news at this point is not included in any valuation score.
*** Maybe Expensive Share Price High Range $36.22
Maybe Expensive Share Price Low Range $31.45
Pricey Share Price High Range $31.45
Pricey Share Price Low Range $26.56
Maybe Pricey Share Price High Range $26.55
Maybe Pricey Share Price Low Range $19.92
Fair Share Price High Range $19.92
Fair Share Price Low Range $14.06
Undervalued Share Price High Rage $14.06
Undervalued Share Price Low Range $12.58
Way Undervalued Share Price High Range $14.06
Way Undervalued Share Price Low Range $12.58
The Kept Easy valuation score finds ranges of prices that help to better understand the current value of the company. This is a comprehensive score that combines various numbers all based on the accounting books of the company including but not limited to P/E. This valuation is fundamental only and does not include sentiment or news.
Disclaimer
Our QFA is based upon corporate accounting numbers made available to the public. We use Alpha Vantage for the majority of our data. Out QFA is written in Python using this data and computed with various code. We do not currently verify the accuracy of the Alpha Vantage data for every company all the time. We do our best to ensure the data we use and make public is perfect and accurate however occasionally some errors do occur. Our code may contain errors we have yet to catch that is printing out incorrect numbers and thus the data presented in the Kept Easy Quantitative Fundamental Analysis should be confirmed with the companies actual financial statements and used with other techniques to ensure a balanced approach to investing. Kept Easy uses this Fundamental Analysis when Investing and Swing Trading its real money.
Kept Easy is not a short seller.
Chat GPT was used as an assistant for some of this blog article. Only information Kept Easy deems accurate is used however we do not allow bias or remove unwanted opinion. While Kept Easy does its best to ensure all data and information is accurate, there is a chance something was overlooked. Please keep this in mind when making decisions and to always verify data and information before making any decisions based on it.
