Source: Intel.

Many investors have mixed views on tech giant and Dow component Intel (NASDAQ:INTC). On one hand, the company dominated the PC microprocessor industry for decades, helping to create the technological revolution that has changed a way of life for billions of people across the globe. Yet more recently, some investors have criticized Intel for losing its leadership role, missing out in large part on the mobile-device revolution and allowing its once seemingly insurmountable lead in semiconductors slip away, allowing rivals Qualcomm (NASDAQ:QCOM) and NVIDIA (NASDAQ:NVDA) to catch up. So far in 2014, Intel stock has performed well, but some skeptical investors aren't sure that financial fundamentals are on the chipmaker's side.

Looking at earnings results is the most popular method most investors use to judge business success. But looking beyond earnings to see information about cash flow analysis adds a lot of color to an earnings report, exposing where money is flowing into and out of a certain business. Let's take a close look at Intel's cash flow figures and pick out three key elements of the company's financial strength.

Stats on Intel

Net Income, Past 12 Months

$10.67 billion

Cash From Operations, Past 12 Months

$20.69 billion

Capital Expenditures, Past 12 Months

($10.91 billion)

Source: S&P Capital IQ.

1. Free cash flow has kept up with net-income growth at Intel.
With many companies, earnings according to generally accepted accounting principles don't necessarily bear much resemblance to the business reality of incoming and outgoing cash flows. Because of certain non-cash items on an income statement, you often have to look more deeply to discover where a company's actual cash is going. With Intel, though, the link between net income and free cash flow has been strong throughout its history.

INTC Free Cash Flow (Annual) Chart

INTC Free Cash Flow (Annual) data by YCharts.

In particular, both net income and free cash flow have jumped in the years since the financial crisis, with volatile movements from year to year masking, in some ways, Intel's overall upward trend. As revenue has grown, Intel has ensured that more money falls through to its bottom line, supporting its profitability, its return of shareholder capital through buybacks and dividends, and its positive overall cash flow.

Source: Intel.

2. Intel's stock buybacks have been all over the map.
Many companies like to make stock buybacks a part of their regular capital allocation strategy, returning some spare money to shareholders who want to sell their shares. For Intel, repurchase activity has helped reduce overall share counts, which is especially valuable in the technology industry to offset the natural inflation of outstanding stock from options grants and other equity-based incentives.

What you won't find from Intel, though, is consistency in its buyback strategy. The company spent a whopping $14 billion on stock buybacks in 2011, in what turned out to be an extremely well-timed repurchase operation. Last year, Intel's repurchase activity fell to just $2 billion, which seemed odd given the stock's relatively low price. Then this year, Intel has bought back more than $7.1 billion in shares in the first nine months, despite a big run-up in share prices.

INTC Repurchase of Capital Stock (Annual) Chart

INTC Repurchase of Capital Stock (Annual) data by YCharts.

Intel hasn't given up entirely on its efforts to balance its capital-allocation moves, as it continues to pay a solid dividend that equates to a 2.7% yield. Moreover, with only modest amounts of debt on its balance sheet, Intel has plenty of room to load up on stock buybacks. Nevertheless, investors should watch to make sure Intel shows at least some restraint in buying back stock if share prices keep climbing.

3. Intel isn't skimping on capital expenditures.
Perhaps in response to the fact that it has fallen behind in the mobile revolution, Intel has boosted the amount it spends on capital expenditures. In 2011, Intel essentially doubled its capex from $5.2 billion to $10.8 billion, and the company has kept its spending levels in the same general neighborhood ever since.

Source: Intel.

The fact is, Intel has a lot to spend money on. Efforts to get its chips into tens of millions of tablets will require substantial new spending, and Intel also wants to increase its commitment to cloud-based data centers and the Internet of Things initiative. Through both capex and spending on research and development, Intel hopes it can catch up with Qualcomm, NVIDIA, and other players in the space and regain undisputed leadership of the industry.

Watch out for Intel's cash flow
From a cash flow perspective, Intel looks just as solid as it does looking at its other fundamentals. The chip giant has a long way to go to regain its past momentum, but Intel should nevertheless have investors excited about its potential to generate more cash well into the future.