Intel is a leading design and technology company that manufactures essential products and technologies that powers the cloud and other smart devices. The company offers computing, networking, data storage, and communications solutions to a broad set of customers across multiple industries. It is the largest manufacturer of semiconductor chips in the world.
Intel owns an unparalleled product portfolio that spans the entire data-centric market. The company’s proprietary technologies enable the integration of products and platforms that addresses evolving customer needs and expansion of markets. The company’s product offerings have expanded to provide end-to-end solutions, scaling from edge computing to the network, the cloud, and the emerging field of AI and autonomous driving. Intel’s business can be broadly categorized into PC-centric (more than 50% of revenue) and data-centric (45%+) businesses. Intel is the 11th most valuable brand in the world, according to Interbrand.Investment Data
- Opportunity Score: 74
- Ticker: NASDAQ:INTC
- Sector: Technology
- Industry: Semiconductors
- Market Cap: 203.00B
- P/E: 8.78
- Dividend Yield: 2.77%
- Dividend Payout Ratio: 24.26%
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
Revenue Growth & Market Exposure
Intel manufactures microprocessors and chipsets that are the most integral parts of personal computers. Intel’s microprocessors are used in 80% of global PCs sold each year. The company caters to the largest equipment manufacturers in the computing and communications industries. Intel is transitioning beyond its traditional PC and server businesses to data-rich markets. The transformation is progressing well with Intel’s data-centric businesses now representing a large share of total revenue. It has also positioned Intel well to serve a broader set of customers in an expanded market for silicon.
Intel’s business is highly capital-intensive with very high barriers to entry. The company undertakes extensive investment in R&D and manufacturing processes. Its investments have enabled the introduction of next-generation process technologies at a rapid pace. Intel is uniquely positioned to invest in process and packaging technology, architectures, memory, interconnects, security technologies, and software to drive computing forward. Over the years, the company has developed extensive scale and expertise which act as strong competitive advantages.
Intel is in a good position to benefit from the growing opportunities in the data center, artificial intelligence, and autonomous driving segments. The company’s leading products such as the second generation Intel Xeon Scalable processors and Intel Stratix10 SX FPGA should further advance its opportunities in AI. The company also launched its 9th generation Intel Core i9 processors, focusing on the growing gaming market segment.
Revenues have grown at more than 7% CAGR over the last decade. The company is investing in equipment and facilities to expand its manufacturing capabilities. Given its rich experience, Intel continues to develop next generation of ground-breaking products based on customer needs and expectations.
Intel is a Dividend Starter. The company has paid dividends for 20 consecutive years and has raised them for four consecutive years. It also repurchased $10.7 billion in shares. The company has a current annual average yield of 2.1% and a very low payout ratio of 29%. During 2018, Intel paid $5.5 billion in dividends and increased its dividend per share by 10% from 2017. The latest dividend hike was 5% with a dividend growth CAGR of 8%+ over the last decade.
Intel’s PC-centric business continues to grow well above expectations and provides a solid source of profit and cash flow. The management is further targeting to cut costs to 30% (from 35% earlier) of revenue by 2020. Intel has registered an impressive EPS growth rate of 17% CAGR in the last decade and more than 23% CAGR over the last three years. Consistent investment in the most advanced manufacturing processes has enabled Intel to command dominant share in huge markets. The company’s growth, both organically as well as through acquisitions has increased its total addressable market size to $250 billion by 2021.
Intel has so far been successful in positioning itself better to combat a slowdown in the PC market. The company is expecting memory, autonomous driving, and 5G to drive future growth. Growing customers’ appetite for high-performance computing also acts as a strong tailwind.
The industry in which Intel operates is highly competitive. The company operates in an increasingly competitive market, particularly in desktop. The computing industry is also continuously evolving. Intel faces intense competition from the likes of Advanced Micro Devices and NVIDIA Corporation. The company also faces competition from companies providing traditional wireless solutions such as cellular, WiFi, and Bluetooth. It competes against other providers of NAND flash memory products. Large scale, vertical integration and strong brand name are huge competitive advantages for Intel.
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|NYSE:IBM||IBM||International Business Machines Corp.||Technology||Information Technology Services||0.72||122.94||109.49||13.95||34.46||8.81||0.0530||0.7401||4||6.52||0.1065||7||8||Subscription||YES||YES||NO||NO||USA||1||5.30|
|NASDAQ:ADI||ADI||Analog Devices, Inc.||Technology||Semiconductors||0.66||114.85||42.37||38.52||34.46||2.98||0.0216||0.8322||4||2.48||0.0985||9||6||Durable||YES||YES||NO||NO||USA||1||2.16|
|NYSE:ACN||ACN||Accenture plc||Technology||Information Technology Services||0.63||224.78||149.19||29.28||34.46||7.68||0.0142||0.4167||4||3.20||0.0955||8||6||Subscription||YES||YES||NO||NO||USA||1||1.42|
|NASDAQ:MCHP||MCHP||Microchip Technology Inc.||Technology||Semiconductors||0.49||101.73||25.68||45.68||34.46||2.23||0.0144||0.6583||4||1.47||0.0192||5||7||Durable||NO||YES||NO||NO||USA||1||1.44|
|NYSE:XRX||XRX||Xerox Corporation||Technology||Information Technology Services||0.50||16.65||3.55||3.56||34.46||4.67||0.0601||0.2141||4||1.00||-0.0091||1||6||Subscription||NO||NO||NO||NO||USA||1||6.01|
Intel is well positioned to lead the AI and autonomous revolution. The company’s evolution from a PC-centric company to a data-centric company with an expanding portfolio of technology solutions is also bearing fruit. Today, the company is better positioned to address customer needs across platforms, storage, connectivity, and software.
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.