Question

Research a company currently in the business news. Explain why it has been receiving media attention and describe the company's current financial condition compared to the rest of the industry. Support your answer with financial ratios and cite any references used.

Answer 1

Note: As per answering guidelines, any references to outside sources are not allowed and can't be included

Solution:-

A company that has recently been in business news is intel corp. The stock price has hit a two decade high. The media attention and the stock high is based on its spectacular Q4 2019 results that saw the revenue in data center and cloud computing businesses take an impressive jump.

Comparative financial condition:-

All figures in $ millions except percentages

Particulars	Intel	AMD	TXN
Revenue (ttm)	71,960	6,020	14,380
Return on Equity (%) (ttm)	27.7%	12.7%	56.1%
Current ratio (mrq)	1.4	2.1	4.1
Debt to Equity ratio (mrq)	37.4%	51.1%	65.2%
Profit margin (ttm)	29.2%	3.5%	34.9%
Operating cash flow (ttm)	33,140	171	6,650
Operating margins (ttm)	31.2%	5.9%	39.5%
EV/EBITDA	8.7	103.2	18.8

As can be seen, intel enjoys a healthy ROE of 27.7%, profit margin of 29.2%, while its financial leverage sits at a comfortable 37.4%. However, current ratio could be better as it stands at below average 1.4 times. Its valuation with EV/EBITDA of 8.7 times is reasonable for a mature company like intel that doesn't grow quite as fast as its smaller peers

Intel's main competitor in data center business AMD doesn't sit at par with intel when it comes to financial performance. The profit margins are far lower, debt to equity ratio is higher and ROE is far lower.

On the contrary, one of its main rival in semiconductor business TXN performs very well with a stupendous ROE of 56.1%, an impressive short term liquidity with current ratio of 4.1 times, and profit margins of 34.9%. Its valuation with EV/EBITDA of 19 times reflect its relatively smaller size and the room to grow quickly.

To summarise, intel is one of the leaders in its businesses and has been that way for a long time. It clearly enjoys larger market shares, stable balance sheet and an impressive operative performance, both standalone and relatively to its competitors.