Since crashing hard after earnings last month, Intel (INTC 1.30%) spent much of the last three weeks clawing its way back higher -- and even approached its pre-earnings share price last week. All that hard work was undone in a day, however -- today, to be precise -- when Intel unveiled its "2022 and long-term growth strategy" last night.
In its presentation, Intel described how, over the long term, it intends to rebuild its business, first reaccelerating sales growth into the "mid-to-high-single digits" range in 2023 and 2024, then stepping even harder on the gas pedal, and racing ahead to 10% to 12% annual revenue growth by 2026. Margins are expected to do a U-turn as well, ranging from 51% to 53% in 2023 and 2024, and reaching a respectable 54% to 58% level by 2026.
But what number is missing from all of the above? You guessed it: 2022.
In 2022, warns Intel, things are going to look a whole lot worse than any of the above, and worse than what we saw in 2021 as well. Intel forecasts a 4% revenue decline this year, to $76 billion, and an even steeper falloff in profitability -- down 27% from 2021 levels at just $3.55 per share.
At this point, it probably seems almost a rhetorical question to ask, "Is Intel a buy?" But let's at least give it the benefit of the doubt.
Now, $3.55 per share isn't a lot of money, but at current share prices of $45 or thereabouts, it is enough to value Intel stock at just 12.7 times current-year earnings. That doesn't look too expensive. With Intel stock paying a 3.1% dividend yield, and promising 10% to 12% growth rates just a few years from now, it might even be an attractive valuation -- or rather, it will be an attractive valuation if and when the growth returns as promised.
Still, that happy future is still four years away. In the meantime, with Intel warning that it will be free cash flow negative this year, and most of its biggest promises about turning around its business still years in the future, I see no compelling need to rush out and buy Intel today.