Fundamentals time people.
Q4 96 $2.13 eps
Q1 97 expected to be "flat" (according to Intel, traditionally conservative in their predictions).
So Q1 comes in at $2.10, and just for the sake of ease of comparison, let's say it stays flat all the way through Q3 97.
That puts INTC with 4 quarters of earnings that add up to $8.43, heading into the traditionally strong Q4.
$137/$8.43= (gears grind) 16.25 P/E
Anyone here think INTC is a 16.25 P/E stock? My opinion is that INTC is a 25 P/E stock, and that puts my minimum target to be $210 at the announcement of Q3 earnings, if the market is putting what I believe is appropriate valuation on the stock.
And this is just to Q3. With "flat" earnings, that would make Intel a a Fortune 2 company. And compare those two companies:
GE 1.66 billion shares@103= ~$170B Q4 96 eps $1.26
INTC .9 billion shares@137= ~$123B Q4 96 eps $2.13
Current P/E of GE? 23.
So in my book, $137 is underpriced from correct valuation of INTC.
And if any of the AMD story is making you nervous, then I guess you may not remember when Motorola and IBM were going to destroy Intel, since everyone knew that Motorola had better chip designers, and IBM had the manufacturing capability and the financial muscle, with their new PowerPC chip. It was a RISC chip, and everyone knew it would be faster and cheaper to manufacture than Intel's "dead-end" chip design. Remember what happened? How many of you are reading this on Pentiums and how many are reading this on PowerPC?
BTW, one of my first notebooks had an AMD 386-sx chip in it, and it worked just fine, so I don't doubt that AMD and Cyrix can make some acceptible product, but I don't think it will affect the long term position of Intel as the best managed AND most financially strong technology AND manufacturing companies.
Competition? It's GOOD for business, and Intel has always thrived in competition.
Just my opinion, and worth what you paid for it. ;)
dg |
