INTC’s Strong Quarter -Comment

July 13th, 2010 by hackel Leave a reply »

Even though it was not part of Intel’s (INTC) press release, we have constructed a cash flow statement for INTC based on available information.

INTC is now selling at just 15.2x this year’s estimated free cash flow (FCF), down from 16.5 for their prior FY, and below the median S&P multiple of 17.3. This is after adjustments for normalized changes in balance sheet items, without which, as to soon be be reported cash flow from operations will be $2 bil above net income. Working capital and changes in taxes penalized operating cash flow during the quarter while it was aided by stock based comp. and A/P. It was a strong quarter operationally, which was the biggest boost to FCF.

On Monday (see story here), we estimated INTC’s fair value at $23.74; resulting from the current strength in its business, FV, given INTC’s low 8.4% cost of equity, is closer to $25.25. We would expect the stock to move up on the news today.

Disclosure: No position

Kenneth S. Hackel, C.F.A.
CT Capital LLC


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