Apple Inc. (AAPL)vs Intel Corp. (INTC)

Quick verdict

This comparison is unusual because one side is not currently profitable. Intel trades at -48.58 times trailing earnings, which is another way of saying it lost money over the period, with a net margin of -19.79% and a return on equity of -10.76%. Apple earned a 27.62% net margin and a 51.87% return on invested capital over the same window. Our framework scores Apple 4 and Intel 2, with Apple taking quality, the balance sheet and income, Intel taking growth, and valuation and momentum too close to call. Yet Intel returned 361.3% over the past year against Apple's 31.11%. The market is pricing a turnaround that the trailing financial statements do not yet show.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Both companies design silicon, but only Intel manufactures it. That single difference explains most of what follows. Intel's 38.93% gross margin sits nearly ten points below Apple's 48.65% because fabrication is capital-intensive and its costs do not flex with demand. Apple outsources manufacturing entirely and holds the customer relationship, which is why its operating margin of 33.17% dwarfs Intel's 0.14%. Intel's operating margin being barely above zero, while gross margin remains near 39%, tells you the problem sits in operating expense and depreciation rather than in pricing. Intel's beta of 2.24 against Apple's 1.09 reflects a market treating it as a turnaround story, with the volatility that implies in both directions.

Valuation

Our framework calls valuation a tie, and the reason is that Intel's multiples are largely uninformative right now. A negative price-to-earnings ratio of -48.58 cannot be compared with Apple's 34.92 in any meaningful way; it simply signals losses. On sales the two are close, 9.07 for Intel against 9.63 for Apple, which is remarkable given that Apple earns a 27.62% net margin on those sales and Intel loses money on its. Intel's price-to-book of 5.98 against Apple's 41.81 looks like a large discount, but Apple's book value has been shrunk by buybacks rather than reflecting asset quality. Intel's free-cash-flow yield of 0.55% against Apple's 3.04% is the cleanest available comparison, and it favours Apple.

Growth profile

Neither company is growing meaningfully. Intel's three-year revenue CAGR is -0.47%, effectively flat and slightly negative; Apple's is 6.43%. Our framework awards the growth factor to Intel on its earnings trajectory, but that figure is computed across a period spanning both profit and loss, and a percentage change measured across zero is arithmetic rather than information. We have not cited it here for that reason. What the revenue lines do show is that Intel has not grown its top line in three years while Apple has managed mid single digits. For a company whose share price rose 361.3% over the past year, the absence of revenue growth is the central tension in the investment case.

Profitability and quality

Apple wins this factor by the widest margin of any comparison on the site. Apple posts a 33.17% operating margin, a 27.62% net margin, a 51.87% return on invested capital and a 137.18% return on equity. Intel posts 0.14%, -19.79%, 0.05% and -10.76% respectively. An ROIC of 0.05% means Intel generated essentially no profit on the capital employed in the business over the period, and a negative net margin means it destroyed shareholder value on an accounting basis. Apple's ROE is flattered by a small equity base after years of buybacks, but no adjustment closes a gap this wide. On current profitability the two companies are not in the same category.

Balance-sheet risk

Apple has the safer balance sheet. Intel carries net debt at 10.26 times EBITDA, a high figure that reflects both real borrowing and a depressed earnings base, since the ratio rises automatically when EBITDA falls. Apple sits at 0.27 times. Intel's current ratio of 1.60 is actually stronger than Apple's 1.00 on near-term liquidity, so the immediate picture is less alarming than the leverage ratio suggests. The concern with Intel is structural rather than imminent: a capital-intensive business with thin operating profit has less room to fund fabrication commitments from internal cash flow. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution, and on that measure Apple is clearly better placed.

Price performance and shareholder returns

Intel has been the far better holding recently, and the gap is extraordinary. It returned 361.3% over the past year against Apple's 31.11%, and 160.28% year to date against 12.89%. Over three years it annualised 44.07% against Apple's 19.74%. Those returns came from a very low base: Intel's 52-week range runs from $23.50 to $140.94, a spread of nearly six times, and its worst five-year drawdown was 67.62% against Apple's 33.43%. Intel pays no dividend at present; Apple yields 0.35% on a 12.13% payout ratio. An investor who bought Intel near the low has been rewarded for taking a risk the financial statements still do not validate.

Which stock fits which investor

Our framework calls valuation a tie, so value investors get no clear steer here; the honest position is that Intel's multiples cannot be interpreted while it is loss-making. Growth investors are pointed toward Intel by the framework, though with revenue contracting slightly over three years that verdict rests on earnings arithmetic we would not lean on. Income investors should note that Intel currently pays nothing while Apple pays 0.35%. Investors who prize quality at a reasonable price will favour Apple without hesitation. The real question this page cannot answer is whether Intel's turnaround completes, because the trailing figures describe a company that has not yet turned. Apple is a bet on continuation; Intel is a bet on change.

• Value: Too close to call
• Growth: INTC
• Income: AAPL
• Quality: AAPL

Frequently asked questions

Is Apple or Intel the better buy right now?

Apple scores 4 on our six-factor framework and Intel 2. Apple wins on profitability, balance sheet and income; Intel wins the growth factor, and valuation and momentum are too close to call. Apple is profitable today; Intel is a turnaround whose trailing statements still show losses.

Why does Intel have a negative P/E ratio?

A negative price-to-earnings ratio of -48.58 means Intel lost money over the trailing period. Its net margin was -19.79% and its return on equity -10.76%. The ratio cannot be compared meaningfully with Apple's 34.92 while earnings remain negative.

Which stock has performed better recently?

Intel, dramatically. It returned 361.3% over the past year against Apple's 31.11%, and 160.28% year to date against 12.89%. Those gains came off a low base: Intel's 52-week range spans $23.50 to $140.94, and its worst five-year drawdown was 67.62%.

Does Intel pay a dividend?

Not at present. Intel's dividend yield is currently 0%. Apple pays 0.35% on a 12.13% payout ratio. Neither stock suits an income-focused mandate on yield alone.

Which company is more profitable, Apple or Intel?

Apple, by a very wide margin. Apple's operating margin is 33.17% against Intel's 0.14%, its net margin 27.62% against -19.79%, and its return on invested capital 51.87% against 0.05%. Intel generated essentially no profit on capital employed over the period.

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