How High Can Intel Fly?

Shares of Intel (Nasdaq: INTC  ) hit a 52-week high yesterday. Let's look at how it got here and see whether clear skies are ahead.

How it got here
Despite some rough patches and lowered guidance related to the Thailand floods last year that crippled the hard-drive industry and subsequently much of the broader PC market, Intel still delivered a strong fourth-quarter earnings release. Full-year revenue jumped 24% to $54 billion, with earnings per share rising 19% to $2.39.

Semiconductor players like Intel are a dying breed, as Chip King Kong is the last domestic player to still fabricate its processors in-house. That vertical integration is a key competitive advantage in a crowded industry, despite the capital intensity of the business.

It came as no surprise when IHS iSuppli released its estimates on the global semiconductor market in 2011 and Intel continued to sit in the No. 1 spot, notably growing its market share to the highest level in more than  a decade.

Fellow Fool Sean Williams even lays out why the company is so strong that it's right for your IRA. I agree with Sean here; Intel will be a long-term winner.

How it stacks up
Let's see how Intel stacks up with its peers.

INTC Chart

INTC data by YCharts

Let's look at some additional fundamental metrics for more insight.

Company

P/S (TTM)

Net Margin (TTM)

Dividend Growth (5-Year Rate)

ROE (TTM)

Intel 2.6 24% 14.4% 27.2%
AMD (NYSE: AMD  ) 0.8 0.1% N/A 38%
Qualcomm (Nasdaq: QCOM  ) 7.1 28.9% 14% 18.5%
NVIDIA (Nasdaq: NVDA  ) 2.3 14.5% N/A 15.9%

Source: Reuters. TTM = trailing 12 months.

AMD's return on equity is higher, largely because it's working with a smaller equity base and uses more leverage. It sports a debt-to-equity ratio of 2.1, higher than Intel's 0.55; AMD is taking on more financial risk.

Qualcomm enjoys Intel-esque dominance within the mobile-chip space and has a similarly strong record with dividend growth. NVIDIA competes in various ways, with its discrete GPUs against Intel's integrated ones, and Intel's new Medfield Atom mobile-bound chip will hope to take on both Qualcomm and NVIDIA.

What's next
Intel will be pushing its mobile strategy with Medfield to battle the ARM Holdings (Nasdaq: ARMH  ) consortium. It's facing an uphill hill with adoption, but Intel can afford to wage a drawn-out war.

On the PC side, its newest Ivy Bridge chip architecture is on the launchpad and ready to take off in Apple Macs and Windows PCs alike this year.

Intel is cleared for take-off.

Interested in more info on Intel? Add it to your Watchlist.

Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Intel, Microsoft, Qualcomm, and Apple. Motley Fool newsletter services have recommended buying shares of NVIDIA, Intel, Apple, and Microsoft, creating bull call spread positions in Microsoft and Apple, and writing puts on NVIDIA. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (8)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 13, 2012, at 10:32 PM, jdwelch62 wrote:

    Nice... :-)

  • Report this Comment On April 13, 2012, at 10:57 PM, jdwelch62 wrote:

    Nice... :-)

  • Report this Comment On April 14, 2012, at 5:21 PM, stretcho44 wrote:

    Intel is "facing an uphill hill[sic] with adoption".

    Intel is not facing as steep uphill battle for adoption as everyone thinks. Everyone expects that Intel will only be successful if the market leaders adopt. Another way for Intel, that is much more likely, will be the entry of new players to the smartphone market. Since Intel will be releasing REFERENCE DESIGNS for each of their CPU offerings, the barrier to market entry has been dropped to near zero. A high quality reference design product can be put on the market for very little engineering cost and very quickly after Intel release.

    The current market players are going to have new competition. Think of Intel designed phones from carriers like ATT, Verizon, Sprint who can then increase their revenues and profits with very little engineering. There is one thing that those companies will have that puts them at an advantage: Intel fabrication capacity to build the main silicon components.

    It will not take a large engineering staff to personalize a reference design for a copy to sell.

  • Report this Comment On April 14, 2012, at 8:37 PM, chris293 wrote:

    intel is going full bore at its plants, at least for now so a little bird told me.

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