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Technology Stocks : Intel Corporation (INTC)
INTC 41.14-3.4%Jan 8 3:59 PM EST
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To: Dave who wrote (153726)1/4/2002 8:41:21 AM
From: GVTucker  Read Replies (1) of 186894
 
The one thing missing from that equation, at least from a bull's point of view, is that Intel's business has a lot of operating leverage. While a 20% growth rate might work on a normalized basis, in a recovery from an earnings trough that growth rate has historically been a lot higher. Note, for example, that if Intel comes in at 50¢ for this year, the earnings growth rate for next year would be 40%.

Of course, the market has learned from past mistakes and is already pricing Intel like this earnings recovery has already occurred. On an apples to apples basis, Intel is trading at about the same PE that it did in early 2000. Granted, it makes more sense to value it higher than it did then (earnings could be argued to be at a temporary low now, whereas then fully 1/3 of earnings came from the venture cap portfolio). If you look at valuation based on current fiscal estimates, Intel has never been priced this high.
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