Shares of computer processor maker Intel (INTC, Financial) surged by 6.36% after the Biden-Harris Administration announced that the company has been awarded up to $3 billion in direct funding under the CHIPS and Science Act for the Secure Enclave program.
The CHIPS and Science Act is a U.S. government initiative aimed at boosting domestic semiconductor production and reducing reliance on foreign suppliers.
Currently, Intel (INTC, Financial) is trading at $20.91 per share, with a market capitalization of $89.41 billion. Despite the recent uptick in stock price, it's important to note some concerning financial metrics. The company has a high P/E ratio of 90.91, suggesting that the stock is priced high relative to its earnings. Additionally, the company has an Altman Z-score of 1.43, which places it in the distress zone, indicating a potential risk of bankruptcy within the next two years.
On the positive side, the stock has several good signs, including insider buying activity and price metrics near a 10-year low. The Price-to-Book (PB) ratio of 0.78 and Price-to-Sales (PS) ratio of 1.62 are both close to 10-year lows, which could make Intel (INTC, Financial) an attractive value play.
However, investors should also be wary of several warning signs. Intel's revenue per share and gross margin have been in decline for the past five years. The company has also been consistently issuing new debt, amounting to $18.9 billion over the past three years, which may strain its financial health in the long term.
Intel's GF Value, which indicates a company's current intrinsic value, stands at $30.84. However, the company's overall evaluation on GuruFocus suggests it may be a "Possible Value Trap, Think Twice." For more details on Intel's intrinsic valuation, you can follow this GF Value link.
While the recent funding from the CHIPS and Science Act is a positive development, it is crucial for investors to consider both the positives and negatives before making any investment decisions with Intel (INTC, Financial).
