Should you buy Intel stock?

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Intel stock analysis. Two minute analysis INTC stock..

Over the last decade, Intel had steady growth of revenue of roughly 5% per year. But revenue dropped 20% in 2022 lead by poor sales of PC and server chips and higher competition.

Every quarter of 2022 brought a decline in revenue versus the same quarter in 2021:

Q1: -6.7%
Q2: -22.0%
Q3: -20.1%
Q4: -31.6%

This is also reflected in the share price which is down roughly 50%.

Intel has responded to this trouble in 3 main ways.

1. It’s cut its dividend by 66% to just 13 cents.
2. It’s cutting costs. Even the CEO’s salary has been reduced by 25%.
3. It’s reinvesting any excess cash into areas that will lead to the creation of long-term value

Making the decision to cut dividends is a tough one, but its necessary when considering the slowdown in growth and the significant debt pile.

Gross profit margin reduced from 55% to 43% in 2022 and gross profit dropped to $26,8 billion in vs. $43,8 billion in 2021. If we exclude the restructuring expenses that the company had (as they’re not recurring), there are two main types of expenses that the company incurs:

- Research and development – that increased to $17,5 billion in 2022 (vs. $15,2 billion in 2021)
- And Marketing, general and administrative – that increased to $7 billion in 2022 (vs. 6,5 billion in 2021)

This leads to an operating profit of only $2,3 billion (vs. 22,1 billion in 2021).

So what we’re looking at is a decrease in demand for Intel’s products combined with high inflation having an impact on the company’s fixed costs.

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