Question

Compare the stock prices produced by the two methods to the actual stock price. What recommendations...

Compare the stock prices produced by the two methods to the actual stock price. What recommendations can you make as to whether clients should buy or sell Intel Corporation (INTC) stock based on your price estimates?

Note: The company is Intel Corp (INTC)

current stock price: $64.34

Dividend Discount Model share price: $70.86

Present Value of Free Cash Flow per share: $74.03

WACC = 9.67%

Dividend growth rate: 12.65%

FCFF growth rate: 9.26%

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Answer #1

as per both the method of the valuation of the share price we can notice that the stock's intrinstic value is higher then the current market value that means shares are underpriced in the market hence we should purchase the underpriced shares. so we should buy the shares of the INTC. because shares are underpriced now and according to the research in long run the stock price= intrinstic value of the share that means the stock price is going to rise in to the future.

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