Intel stock: How to calculate intrinsic value?

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Below are the data sources, inputs and calculation used to determine the intrinsic value for Intel.

NasdaqGS:INTC Discounted Cash Flow Data Sources

Data Point	Source	Value
Valuation Model		2 Stage Free Cash Flow to Equity
Levered Free Cash Flow	Average of 40 Analyst Estimates (S&P Global)	See below
Discount Rate (Cost of Equity)	See below	9.6%
Perpetual Growth Rate	5-Year Average of US Long-Term Govt Bond Rate	2.2%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for NasdaqGS:INTC

Data Point	Calculation/ Source	Result
Risk-Free Rate	5-Year Average of US Long-Term Govt Bond Rate	2.2%
Equity Risk Premium	S&P Global	6.0%
Semiconductor Unlevered Beta	Simply Wall St/ S&P Global	1.17
Re-levered Beta	= 0.33 + [(0.66 * Unlevered beta) * (1 + (1 - tax rate) (Debt/Market Equity))] = 0.33 + [(0.66 * 1.173) * (1 + (1 - 21.0%) (18.30%))]	1.229
Levered Beta	Levered Beta limited to 0.8 to 2.0 (practical range for a stable firm)	1.229
Discount Rate/ Cost of Equity	= Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium) = 2.22% + (1.229 * 6.01%)	9.61%

Discounted Cash Flow Calculation for NasdaqGS:INTC using 2 Stage Free Cash Flow to Equity

The calculations below outline how an intrinsic value for Intel is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst's estimates of cash flows going forward 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

NasdaqGS:INTC DCF 1st Stage: Next 5 year cash flow forecast

	Levered FCF (USD, Millions)	Source	Present Value Discounted (@ 9.61%)
2021	16,062.7	Analyst x10	14,654.73
2022	20,244.33	Analyst x3	16,850.86
2023	23,409	Analyst x1	17,777.09
2024	25,068	Analyst x1	17,368.28
2025	26,337.55	Est @ 5.06%	16,648.37
2026	27,446.65	Est @ 4.21%	15,828.69
2027	28,438.51	Est @ 3.61%	14,963.11
2028	29,347.3	Est @ 3.2%	14,087.78
2029	30,199.23	Est @ 2.9%	13,226.03
2030	31,014.03	Est @ 2.7%	12,392.28
Present value of next 5 years cash flows			$153,797

NasdaqGS:INTC DCF 2nd Stage: Terminal Value

	Calculation	Result
Terminal Value	FCF2030 × (1 + g) ÷ (Discount Rate – g) = $31,014.029 x (1 + 2.22%) ÷ (9.61% - 2.22% )	$429,131.19
Present Value of Terminal Value	= Terminal Value ÷ (1 + r)10 $429,131 ÷ (1 + 9.61%)10	$171,467.97

NasdaqGS:INTC Total Equity Value

	Calculation	Result
Total Equity Value	= Present value of next 10 years cash flows + Terminal Value = $153,797 + $171,468	$325,264.97
Equity Value per Share (USD)	= Total value / Shares Outstanding = $325,265 / 4,253	$76.48

NasdaqGS:INTC Discount to Share Price

	Calculation	Result
Value per share (USD)	From above.	$76.48
Current discount	Discount to share price of $49.28 = ($76.48 - $49.28) / $76.48	35.6%

Learn more about our DCF calculations in Simply Wall St’s analysis model.