INTC Stock: More Upside in Intel Corporation Coming Soon?

INTC StockWhat to Expect from Intel’s Earnings Report

Intel Corporation (NASDAQ:INTC) stock was left out of the tech boom last year. As a chip maker, Intel stock just didn’t seem that attractive compared to some of the big names in the Internet industry. But that doesn’t change the fact that the company is running a solid business. And going forward, Intel’s value could make it attractive again.

After all the hype, investors want their companies to make money. On that front, Intel delivers exceptional results. Despite all the concerns on the slowing down of the PC market, Intel has been beating Wall Street’s expectations again and again.

This time around, Intel is expected to report solid earnings again. Here’s what analysts are expecting.

Stats on Intel Corporation

Overall expectations are quite high for Intel stock. Revenue in the first quarter of 2016 is expected to increase 8.40% year-over-year to $13.86 billion. Wall Street analysts are also predicting $0.48 in earnings per share (EPS), which would be 17.07% higher compared to the first quarter of last year. (Source: “Analyst Estimates,” Yahoo! Finance, last accessed April 17, 2016.)

Analyst EPS Estimate $0.48
Change from Year-Ago EPS 17.07%
Revenue Estimate $13.86 billion
Change from Year-Ago Revenue 8.40%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance

INTC stock has a pretty solid track record when it comes to earnings beats. In the past four quarters, Intel has beaten analysts’ estimates in three of them. And even when it didn’t beat estimates in the first quarter last year, its EPS came in at $0.41—exactly the same as what Wall Street was expecting. So Intel had no earnings misses last year.

This time, even the declining PC market might not be that bad for Intel’s business. As Microsoft Corporation (NASDAQ:MSFT) launched “Windows 10” last year, adoption of the new operating system has been faster than all previous generations. This might have led to higher demand for new Intel-equipped PCs.

Note that Intel’s products are not just geared towards desktops and laptops. They are also widely used in smartphones—something we can’t live without today. The hottest smartphone maker, Apple Inc. (NASDAQ:AAPL), is expected to release the “iPhone 7” this September. It was reported that a significant portion of the iPhone 7 LTE modem chips will be produced by Intel. (Source: “Intel to Produce ‘Significant Portion’ of LTE Modem Chips for iPhone 7’,” Macrumors, March 4, 2016.)

Last time Intel reported earnings, the highlight was the record quarterly revenue from the Data Center and Internet of Things (IoT) Groups. The Data Center Group includes platforms designed for enterprise and cloud infrastructure. The IoT Group offers platforms for a wide range of market segments, including the retail, transportation, industrial, and buildings spaces. Both groups are expected to continue performing strongly in this reporting quarter. (Source: “Earnings Release Q4 2015,” Intel Corporation, January 14, 2016.)

Of course, not everything looks so rosy. Intel’s Client Computing Group and software and services segment showed year-over-year declines in revenue in the fourth quarter of 2015. Whether these areas could improve remains to be seen.

The Bottom Line on INTC Stock

At the end of the day, let’s not forget how inexpensive Intel stock is right now. Trading at $31.46 per share, INTC stock has a forward price-to-earnings multiple of just above 12X. Moreover, Intel also pays a dividend with a quite handsome yield of 3.27%. The company has been increasing its dividends since 2003.

Intel is scheduled to report first-quarter earnings on Tuesday, April 19 after the closing bell. If things turn out to be great, there could be some serious action in Intel stock.