Is Intel (INTC) a value investment?

Many investors consider The Intel Corporation (NASDAQ: INTC) a bargain in semiconductors and computer components.

Notably, Intel (INTC) is cheap when compared to other processor makers. Mr. Market paid $64.75 for Intel and $636.50 for NVIDIA (NASDAQ: NVDA) on 16 April 2021.

Both Intel and NVIDIA (NVDA) build scalable processors. Yet Intel makes more money than NVIDIA. For instance, NVIDIA reported $5.003 billion in quarterly revenues on 31 January 2021. In contrast, Intel reported $19.978 in quarterly revenues on 31 December 2020.

Does Intel Make Money?

Thus, Intel (NASDAQ: INTC) is cheaper than NVIDIA and it makes more money. Hence, Intel is a classic value investment in comparison to NVIDIA.

For example, Intel reported a quarterly gross profit of $11.348 billion and a quarterly operating income of $5.884 billion on 31 December 2020. Conversely, NVIDIA reported a quarterly gross profit of $3.157 billion and a quarterly operating income of $1.507 billion on 31 January 2021.

Similarly, Intel reported a quarterly operating cash flow of $9.89 billion and a quarterly ending cash flow of $2.509 billion on 31 December 2020. Meanwhile, the NVIDIA Corporation reported a quarterly operating cash flow of $2.067 billion and a quarterly ending cash flow -$1.404 billion on 31 January 2021.

NVIDIA had $22.895 billion in cash and short-term investments on 31 January 2021. Meanwhile, Intel had $23.895 billion in cash and short-term investments on 31 December 2020.

Why Does Mr. Market Prefer NVIDIA?

Thus, Intel (INTC) generates more cash and makes more money than NVIDIA. So why does Mr. Market prefer NVIDIA?

My guess is that investors are looking at the growth. Stockrow estimates NVIDIA had a revenue growth rate of 61.13% in the quarter that ended on 31 January 2021. That growth rate rose from 56.8% on 31 October 2020 and 40.82% on 31 January 2020.

In contrast, Stockrow gate Intel a revenue growth rate of -1.14% for the quarter ending on 31 December 2020. That revenue growth rate rose from -4.47% and fell from 19.53% on 30 June 2020 and 23.45% on 31 March 2020.

However, Intel gained value in 2020. Intel’s Total Assets grew from $136.524 billion on 31 December 2019 to $153.091 billion on 31 December 2020. Similarly, NVIDIA’s total assets grew from $17.315 billion on 31 December 2020 to $28.791 billion on 31 January 2021.

Thus, both NVIDIA and Intel have a lot of value, but Intel has far more value. Yet I think NVIDIA could grow to rival Intel in size and value at the same time.

How Far can NVIDIA and Intel Grow?

I think NVIDIA (NVDA) grew faster in 2020 than Intel (INTC) because NVIDIA is more of a consumer products company.

 To explain, NVIDIA makes many processors video games and TV sets, while Intel concentrates on the commercial computing market. Demand for video games increased in 2020, because coronavirus trapped many people at home with nothing to do, so they played more video games.

Interestingly, semiconductor sales in the Americas rose in 2020. Statista estimates semiconductor sales in the Americas rose from $6.73 billion in September 2019 to $8.36 billion in December 2020.

Thus, the market for Intel’s products is growing. However, semiconductor sales are still below the $9.85 billion high they hit in October 2018.

Similarly, global semiconductor sales grew by 6.5% to $439 billion in 2020, The Semiconductor Industry Association (SIA) estimates. In December 2020, global semiconductor sales were $39.2 billion an 8.3% increase from December 2019. Similarly, in the Fourth Quarter of 2020 global semiconductor sales grew by 8.3% to $117.5 billion, the SIA estimates.

Is Intel a good stock?

Thus, the semiconductor industry is growing, which bodes well for Intel (INTC).

I consider Intel a good stock in a growing industry. I think Intel is a good stock is a good because it is cheap and in a company that makes money.

Plus, INTC pays a good dividend. Intel will pay a 35.75₵ quarterly dividend on 1 June 2021. That quarterly dividend grew from 33₵ on 1 December 2020. Overall, Intel offered an annualized dividend of $1.39 and a dividend yield of 2.13% on 15 April 2021.

If you are seeking a cheap dividend stock with a margin of safety in a growing market, the Intel Corporation (NASDAQ: INTC) is worth investigating. Intel shows semiconductors are value investment.