This is made up by an average of 35

 

This number is significantly higher than the market capitalization
valuation and indicates that the stock is undervalued and worth buying. The
model lacks the ability to take the market conditions into account but makes it
easier to make comparisons across companies of different sized and in different
industries.

3.6
Cash flow valuation: The discounted free cash flow method

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The DCF takes the most important aspect of a company into consideration,
cash. It takes the following features and creates a valuation from them: the
cost of capital, opportunity cost and discounts future value to a present value
estimate. We will examine Intel based on 2012 to 2016.

Intel, USD millions

2012

2013

2014

2015

2016

Sales/Revenue

$53.341

$52.708

$55.870

$55.355

$59.387

Revenue growth

-1,22%

-1,19%

6%

-0,92%

7,28%

Operating Cash Flow

$18.884

$20.776

$20.418

$19.017

$21.808

Operating CF/Revenue

35,40%

39,40%

36,50%

34,40%

36,70%

Capital Expenditures

$-11.842

$-10.747

$-10.197

$-7.446

$-9.625

CapEx/Revenue

22,20%

20,40%

18,30%

13,50%

16,20%

Free Cash Flow

$7.857

$10.065

$10.313

$11.691

$12.183

 

In the following table, the revenue of 2017 ($60.020 million, represents
1,07% y/y growth, is made up by an average of 35 analyst estimates via
Bloomberg. The same goes for the revenue for 2018, $61.484 million (2.42%
growth). For the next years, 2019-2021, I used a rounded compounding annual
growth rate (CAGR). For the operating cash flow, 36,5% operating cash flow to
revenue ratio is used. Lastly, for a projection of the CapEx, I used the fixed
18,1% capex to revenue ratio.