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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Jacques Newey who wrote (94713)	12/29/1999 7:06:00 PM
From: Jacques Newey	Respond to of 186894

Tony & Intel Investors- Fools up their Intel stake. fool.com Finally, on 12/21, Phil made his case for Intel. As you well know, a company's financials weigh heavily into our decision making. In fact, I think a careful study of the numbers is the surest way to identify companies that are truly kicking butt, taking names, and making rules. As I compare the financial statements of Coke, AmEx, Yahoo!, and Intel, the one company that not only meets all of our Rule Maker financial criteria, but also shows remarkable improvement in all aspects of its business performance over the past year is... Intel. What follows are the five core financial metrics we look at, based on a year-over-year comparison of Intel's trailing 12 months of operations: Sales grew 14.4%. Gross margins improved by 5 percentage points to 58.7% Net margins improved by 2.5 percentage points to 25.3%. Intel has 11.4 times more cash than debt, a slight improvement. The flow ratio now stands at 0.97, down from 1.19 -- an 18.9% improvement. Further, an examination of Intel's cash flow reveals even more bullish signals. Over the past year, Intel has generated $8.6 billion in free cash flow (FCF) -- 94% year-over-year growth. That gives Intel a 29.8% FCF margin. That's to say, for every $1.00 of sales, Intel earns 29.8 cents of pure cash profit. Not only is that an outstanding level of cash profitability, but it's also a big jump from the 17.6% FCF margin in the year prior. There's more... Intel's cash conversion cycle (CCC) has shown consistent improvement over the last 6 quarters, declining from 63.7 days in Q2 '98 to 48.5 days in Q3 of this year. Quite simply, this means Intel is collecting cash faster, and as always, cash now is better than cash later, so this is a very positive development. Finally, Intel is our second-highest scoring Rule Maker with a top-tier score of 54 points (out of 61). Clearly, Intel is a top-quality company. And interestingly enough, I find Intel's valuation quite reasonable at 34x trailing free cash flow. While business quality is always my (and this portfolio's) first and foremost concern in selecting investments, I don't think it unFoolish to consider valuation as a secondary concern when choosing among high-quality investment alternatives. In the next five trading days, the Rule Maker Portfolio will add approximately $500 worth of Intel shares in accordance with normal Fool trading guidelines.