In this article I will analyze Intel Corp. based in its earning per Share (EPS) and its Price/Earning (P/E) ratio.
First, we need to see how was Intel EPS doing in the last six years. By browsing Intel EPS for the last years, I found that Intel EPS rise from 2.87$ in 2017 until it reached 5.15$ in 2021 then dropped to 3.25$ in 2022 which is the figure that I’m going to use to estimate the growth rate as shown below:
The growth rate for Intel during the last five years was 2.52% which consider very low, however it is what it is, because if Intel was able to maintain its EPS level at 5.15$ which was in 2021, that will lead to growth rate equal to 12%.
Now that we have the growth rate of the Intel’s EPS in the last five years, we are going to use this growth rate to estimated what will Intel’s EPS be in 2027 ,which is five years from now by applying the following formula:
- Where PV = Intel EPS in year 2022 = 3.25 $
- i = growth rate of Intel EPS estimated above = 2.52%
- n = years of investment = 5 years in 2027
By plugging the numbers in the above formula we estimated Intel’s EPS in year 2027 will be 3.8$.
Now we will go back to see the lowest (P/E) for Intel in same years period. The lowest (P/E) for Intel was in year 2022 where it was 7.83.
Now that we have (P/E) ratio and the prospected EPS in 2027, all what we have to do is to multiply these two numbers and see what Intel’s stock price will be in year 2027, which is as following:
Intel’s Stock price in 2027 = (3.8)*(7.83)= 29.75$
By applying this method we can see that Intel’s Stock price will go from 26.92 $ which is the price in the market as Dec 2022, to reach 29.75$ in year 2027, which means that if you invest 10,000$ it will be 11,051$ in 2027.
Just to consider how important the role that EPS play and how it effect the stock price see the blow image when Intel’s EPS dropped from 5.15$ in 2021 until it reached 3.25 at Sep 2022:
As you can see the price dropped from its high where it was 64.89$ until it reached to 26$, which means that maintain a good and increasing EPS is really important for the company stock’s price which will keep the stock price moving up or at least keep it as it is.
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