Are Intel Corporation’s (INTC) Most Watched Stocks Worth Betting Now?
Intel (INTC) is one of the most watched stocks by Zacks.com visitors lately. So it might be worth looking at some of the factors that could affect the stock’s short-term performance.
Over the past month, shares of the world’s largest chipmaker have returned +1.3%, compared to the +4.7% change in the Zacks S&P 500 composite. During this period, the industry Zacks Semiconductor – General, in which Intel is owned, gained 8.6%. The key question now is: what could be the future direction of the title?
Although press releases or rumors about a substantial change in a company’s trading outlook will usually “trend” its stock and cause an immediate price change, there are always fundamental facts that ultimately dominate the take. purchase and retention decision.
Revisions to earnings estimates
Rather than focusing on anything else, at Zacks we prioritize assessing change in a company’s earnings projection. Indeed, we believe that the fair value of its shares is determined by the present value of its future earnings streams.
Our analysis is primarily based on how sell-side analysts covering the stock revise their earnings estimates to reflect the latest trading trends. When a company’s earnings estimates increase, the fair value of its stock also increases. And when the fair value of a stock is higher than its current market price, investors tend to buy the stock, causing its price to rise. For this reason, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term movements in stock prices.
For the current quarter, Intel is expected to post earnings of $0.80 per share, representing a change of -42.5% from the prior year quarter. The Zacks consensus estimate has remained unchanged for the past 30 days.
The consensus earnings estimate of $3.49 for the current fiscal year indicates a year-over-year change of -36.2%. This estimate has remained unchanged for the past 30 days.
For the next fiscal year, the consensus earnings estimate of $3.71 indicates a change of +6.3% from what Intel is expected to report a year ago. Over the past month, the estimate has remained unchanged.
With an impressive externally audited balance sheet, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance because it effectively harnesses the power of earnings estimate revisions. The magnitude of the recent change in the consensus estimate, plus three more factors related to earnings estimatesresulted in a Zacks Rank #3 (Hold) for Intel.
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Expected revenue growth
Although earnings growth is arguably the most superior indicator of a company’s financial health, nothing as such happens if a company is unable to increase revenue. After all, it is almost impossible for a company to increase its profits for an extended period of time without increasing its revenue. It is therefore important to know the potential revenue growth of a company.
For Intel, the consensus sales estimate for the current quarter of $18.32 billion indicates a year-over-year change of -6.9%. For the current and future fiscal years, the estimates of $75.39 billion and $78.36 billion indicate variations of -3.4% and +3.9%, respectively.
Latest reported results and history of surprises
Intel reported revenue of $19.53 billion in the last quarter, representing a year-over-year change of +2.8%. EPS of $1.09 for the same period versus $1.52 a year ago.
Compared to the Zacks consensus estimate of $18.3 billion, reported revenue is a surprise +6.7%. Surprise EPS was +21.11%.
The company has exceeded consensus EPS estimates in each of the past four quarters. The company has exceeded consensus earnings estimates every time during this period.
No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.
Compare the present value of a company’s valuation multiples, such as its price/earnings (P/E), price/sales (P/S), and price/cash flow (P/CF), to its own historical values help determine whether its stock is fairly valued, overvalued or undervalued, while comparing the company against its peers on these metrics gives a good idea of the reasonableness of its price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
Intel is rated 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 rating metrics that led to this rating.
The facts discussed here and plenty of other information on Zacks.com might help determine whether or not it’s worth paying attention to the market buzz about Intel. However, its No. 3 Zacks ranking suggests it could perform in line with the broader market in the near term.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.
This company could rival or surpass other recent Zacks stocks that are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.