| PROBLEM 8-9 | ||||||||||||
| Given | ||||||||||||
| Beta | 1.66 | |||||||||||
| Dividend payout ratio | 48% | |||||||||||
| EPS for 2007 | $ 1.13 | |||||||||||
| Stock Price (12/07/06) | $ 20.88 | |||||||||||
| Anticipated growth rate in EPS (5 years) | 12% | |||||||||||
| Description | Market Cap | P/E | Return on Equity % | Dividend Yield % | Long-term Debt to Equity | Price to Book Value | Net Profit Margin | Price To Free Cash Flow | ||||
| Sector: Technology | 5344.81B | 27.716 | 14.77% | 1.90% | 0.691 | 5.588 | 10.39% | 55.435 | ||||
| Industry: Semiconductor – Broad Line |
252.89B | 19.9 | 16.20% | 1.30% | 0.096 | 3.42 | 15.50% | 193.3 | ||||
| Intel Corp. | 120.51B | 17.622 | 19.63% | 1.90% | 0.064 | 3.437 | 18.72% | 121.039 | ||||
| Texas Instruments Inc. | 44.62B | 11.08 | 22.94% | 0.50% | 0.004 | 3.71 | 18.67% | -5577.55 | ||||
| STMicroelectronics NV | 16.35B | 24.959 | 7.81% | 0.70% | 0.209 | 1.764 | 8.24% | -11.219 | ||||
| Advanced Micro Devices Inc. | 11.79B | 21.152 | 12.61% | 0.00% | 0.138 | 2.088 | 10.13% | -58.916 | ||||
| Analog Devices Inc. | 11.48B | 22.667 | 15.42% | 1.90% | NA | 3.342 | 21.48% | 311.392 | ||||
| Maxim Integrated Products Inc. | 10.28B | 23.025 | 16.93% | 1.90% | NA | 3.681 | 21.39% | NA | ||||
| National Semiconductor Corp. | 8.04B | 18.049 | 25.67% | 0.60% | 0.012 | 4.481 | 22.18% | 154.483 | ||||
| Solution | ||||||||||||
| a. | Intel Comparison to Industry | |||||||||||
| P/E | ||||||||||||
| ROE | ||||||||||||
| Dividend Yield | ||||||||||||
| LTD to Equity | ||||||||||||
| Price to Book | ||||||||||||
| Net Profit Margin | ||||||||||||
| Price to Cash Flow | ||||||||||||
| b. | ||||||||||||
| Estimated cost of equity | ||||||||||||
| Estimated growth rate | ||||||||||||
| DCF Estimate of Share Price | ||||||||||||
| c. | ||||||||||||
| Imputed growth rate | ||||||||||||
| d. | ||||||||||||
| Estimated future dividends | Year | Earnings | Dividends | |||||||||
| 2007 | $ 1.13 | |||||||||||
| 2008 | ||||||||||||
| 2009 | ||||||||||||
| 2010 | ||||||||||||
| 2011 | ||||||||||||
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| Future growth rate | ||||||||||||
| Value of Intel Shares (2-stage) | ||||||||||||
| 2007-2011 | ||||||||||||
| 2011 and beyond | ||||||||||||
| Estimated equity value | ||||||||||||
