Intel Corp: $INTC cash flow valuation update

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

Morningstar.com

Yahoo! Finance

INTC.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate anypositions within the next 72 hours.