What to Expect From Intel Earnings

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Intel Corp. (NASDAQ: INTC) is scheduled to report its third-quarter financial results after the markets close on Tuesday. The consensus estimates from Thomson Reuters are $0.72 in earnings per share (EPS) and $15.58 billion in revenue. In the same period of last year, it posted EPS of $0.64 and revenue of $14.46 billion.

In September, Intel raised its guidance for the third quarter. This increase is primarily driven by replenishment of personal computer (PC) supply chain inventory. Intel is also seeing some signs of improving PC demand.

The company now expects third-quarter revenue to be $15.6 billion, give or take $300 million, versus the previous estimate of $14.9 billion, plus or minus $500 million.

Intel also forecast the midpoint of the third-quarter gross margin range at roughly 63%, which is up 1% from the same period last year, driven mostly by higher PC unit volume.

Just few days prior to the increased guidance update, Standard & Poor’s noted that there was more upside likely for semiconductor sales, despite the large sector gains that have been seen. The firm said:

Semiconductors were a driving force in upward revisions to Q3 and Q4 technology earnings estimates and the semiconductor stocks were rewarded (+11.5% since the start of July). From a valuation perspective, the semiconductors trade at a 33% discount to its ten year average despite the recent price appreciation. At a 15.1x price-to-earnings ratio (P/E) on a next-twelve-month basis, it is trading at a more attractive valuation than the technology sector, which has a P/E of 17.1x.

We believe that several opportunities remain within technology and specifically semiconductors. Demand for semiconductors is normally a sign of economic growth. As the economy and consumer continues to improve, so should the business prospects (and the stocks of) for companies comprising this sub-industry.

Prior to the release of the earnings report, a few analysts weighed in on Intel:

  • Barclays has an Overweight rating with a $45 price target.
  • Wells Fargo reiterated an Outperform rating with a $45 price target.
  • Sanford Bernstein has a Neutral rating with a $35 price target.
  • Pacific Crest reiterated a Buy rating with a $44 price target.
  • BlueFin Research has a Buy rating.
  • RBC Capital Markets reiterated a Sector Perform rating with a $38 price target.
  • Brean Capital reiterated a Buy rating with a $40 price target.
  • B. Riley reiterated a Buy rating with a $45 price target.
  • Canaccord Genuity has a Buy rating with a $44 price target.
  • Morgan Stanley has an Underweight rating with a $34 price target.

Excluding Tuesday’s move, Intel has outperformed the broad markets, with the stock up about 11% year to date. Over the past 52 weeks, the stock is up 16.5%.

Shares of Intel were trading up nearly 2% at $38.03 on Tuesday, with a consensus analyst price target of $40.65 and a 52-week trading range of $27.68 to $38.36.