Intel Corporation (INTC) is Attracting Investor Attention: Here is What You Should Know


Intel (INTC) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.

Over the past month, shares of this world’s largest chipmaker have returned -15.5%, compared to the Zacks S&P 500 composite’s -8.1% change. During this period, the Zacks Semiconductor – General industry, which Intel falls in, has lost 16.6%. The key question now is: What could be the stock’s future direction?

Although media reports or rumors about a significant change in a company’s business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.

Revisions to Earnings Estimates

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company’s earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock’s fair value is higher than its current market price, investors tend to buy the stock, resulting in its moving price upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

For the current quarter, Intel is expected to post earnings of $0.75 per share, indicating a change of -41.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +6.4% over the last 30 days.

The consensus earnings estimate of $3.50 for the current fiscal year indicates a year-over-year change of -36%. This estimate has changed -0.7% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $3.66 indicates a change of +4.5% from what Intel is expected to report a year ago. Over the past month, the estimate has changed -0.8%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock’s price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Intel is rated Zacks Rank #3 (Hold).

The chart below shows the evolution of the company’s forward 12-month consensus EPS estimate:

12 Month

Projected Revenue Growth

Even though a company’s earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It’s almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company’s potential revenue growth is crucial.

For Intel, the consensus sales estimate for the current quarter of $17.98 billion indicates a year-over-year change of -8.4%. For the current and next fiscal years, $75.43 billion and $78.43 billion estimates indicate -3.3% and +4% changes, respectively.

Last Reported Results and Surprise History

Intel reported revenues of $18.35 billion in the last reported quarter, representing a year-over-year change of -6.7%. EPS of $0.87 for the same period compares with $1.39 a year ago.

Compared to the Zacks Consensus Estimate of $18.32 billion, the reported revenues represent a surprise of +0.18%. The EPS surprise was +8.75%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

Valuation

No investment decision can be efficient without considering a stock’s valuation. Whether a stock’s current price rightly reflects the intrinsic value of the underlying business and the company’s growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company’s valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values ​​helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on ), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Intel is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values ​​of some of the valuation metrics that have driven this grade.

Bottom Line

The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Intel. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Click to get this free report

Intel Corporation (INTC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Leave a Comment