Is Intel Corporation (INTC) Really Worth $116 billion?

In other words, Intel is making inroads into the new computing model while dominating the established market. Microsoft can’t make these claims, and yet the two stocks can be bought for very similar P/E markups. I would argue that Intel deserves better. Microsoft is fairly valued at best, and overvalued if the recent restructuring gamble doesn’t pan out.

So what’s Intel Corporation (NASDAQ:INTC) really worth? Analysts currently believe that the company will grow earnings by 11% a year for the next 5 years. I think that’s a very conservative estimate, given Intel’s market power and its 28% growth rate over the last 5 years, but let’s go with the Street’s view.

Plugging that growth rate into a discounted cash flow calculator, I arrive at a fair price of at least $30 per share. Like I said, I don’t agree with the future growth-rate assumptions here, and believe that Intel is worth more than that.

But there you have it: Intel should be worth at least 30% more than the current price tag. Intel has earned every penny of its $117 billion market cap, and more besides.

The article Is Intel Really Worth $116 billion? originally appeared on Fool.com and is written by Anders Bylund.

Fool contributor Anders Bylund owns shares of Intel, but he holds no other position in any company mentioned.

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