Why Does Intel (INTC) get No Love from Analysts?

Intel may be undervalued with poor growth indicators, but the 36 analysts following the company give it an rating of hold. Their target prices range from $17.0 to $45.0 per share, for an average of $35.15. At today's price of $35.4, Intel is trading 0.7% away from its average target price, suggesting there is an analyst consensus of little upside potential for the stock.

Intel Corporation designs, develops, manufactures, markets, and sells computing and related products worldwide. Based in Santa Clara, CA, the large-cap Technology company has 131,900 full time employees. Intel has provided a 3.5% dividend yield over the last 12 months.

Since Intel has negative earnings per share, its P/E ratio is not meaningful. Based on its positive EPS guidance of 1.76, however, the company has a forward P/E ratio of 20.1. The average P/E ratio for the Technology sector is 27.16.

On the other hand, the market is potentially undervaluing Intel in terms of its book value because its P/B ratio is 1.47. In comparison, the sector average P/B ratio is 6.23.

The question is, why does Intel have a bad rating if it is apparently undervalued in terms of traditional metrics? One reason could be the company's disappointing rate of margin growth, which in the analysts' opinion, will continue in coming years.

2020-01-24 2021-01-22 2022-01-27 2023-01-27
Revenue (MM) $71,965 $77,867 $79,024 $63,054
Gross Margins 58.6% 56.0% 55.4% 42.6%
Operating Margins 31.2% 30.7% 27.9% 3.7%
Net Margins 29.25% 26.84% 25.14% 12.71%
Net Income (MM) $21,048 $20,899 $19,868 $8,014
Net Interest Expense (MM) n/a n/a n/a n/a
Depreciation & Amort. (MM) -$10,826 -$12,239 -$11,792 -$13,035
Earnings Per Share $4.71 $4.94 $4.85 -$0.7
EPS Growth n/a 4.88% -1.82% -114.43%
Diluted Shares (MM) 4,473 4,232 4,095 4,184
Free Cash Flow (MM) $49,358 $50,123 $48,189 $40,277
Capital Expenditures (MM) -$16,213 -$14,259 -$18,733 -$24,844
Net Current Assets (MM) -$27,781 -$24,804 -$14,457 -$28,410
Current Ratio 1.4 1.91 2.13 1.57
Long Term Debt (MM) $25,308 $33,897 $33,510 $37,684
LT Debt to Equity 0.33 0.42 0.35 0.36
The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.