Is Net Margin Growth The Key Factor Behind 1.9x Growth In Intel’s Share Price Since February 2017?

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Intel’s (NASDAQ: INTC) stock price grew almost 90% from $35 in February 2017 to $66 in February 2020, primarily due to a significant jump in net margins. Steady growth in revenue and a drop in outstanding share count also helped, although stock price gains were partly offset by a slight decrease in the P/E multiple.

In our interactive dashboard, What Factors Drove The 90% Growth In Intel’s Stock Over The Last 3 Years?, we break down the factors behind this move.

(A) Intel’s Total Revenue has grown from $62.76 billion in 2017 to almost $72 billion in 2019

  • Intel’s total revenue has risen from $62.76 billion in 2017 to $71.97 billion in 2019, largely driven by a $4.4 billion growth in data center revenue.
  • We expect total revenue to rise to $74.2 billion in 2020, on the back of stronger demand for IoT (Internet of Things) systems, and Intel’s new 10nm chips.
  • The $2.2 billion growth in total revenue is expected to be driven by roughly equal growth in all segments, with Internet of Things expected to see the highest percentage growth.

(B) Net Income increased from $9.6 billion in 2017 to $21.05 billion in 2019

  • Intel’s net income grew from $9.6 billion in 2017 to $21.05 billion in 2019, due to higher revenues and elevated margins.
  • Net income margin increased from 15.3% in 2017 to 29.2% in 2019.
  • Intel’s Expenses as % of revenue largely decreased from 2017 to 2019.
  • Notable reduction can be seen in effective tax rate, and R&D and SG&A expenses as a % of revenue.
  • EPS has risen from $2.04 in 2017 to $4.77 in 2019, and is expected to rise further to $5.09 in 2020.
  • The EPS spiked to $4.57 in 2018 primarily due to a drop in the effective tax rate, and was slightly supported by a lower share count.

(C) Price-To-Earnings (P/E) multiple dropped slightly

  • Intel’s P/E multiple has been volatile and is slightly lower than what it was in 2017.
  • The current P/E is also lower than that of its peers Nvidia and AMD.

See all Trefis Price Estimates and Download Trefis Data here

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