Intel Beats On The Top And Bottom Line

Intel Corporation (Ticker Symbol: INTCWealth Strength IndexAAPL is Extremely Up and trending Up) reported earnings that beat on the top and bottom lines.  The American multinational corporation and technology company reported an earnings per share beat of $1.42 vs. Wall Street analysts’ expectations of $1.24. Additionally, the Santa Clara, Calif.-based company reported a massive revenue beat of $19.19 billion vs. Wall Street analysts’ expectations of $18.05 billion.

Intel’s top business segment, which sells processors for laptops, desktops, and two-in-one devices reported revenue of $9.71 billion, which was greater than the $9.59 billion that the street was expecting.  The company’s second-largest business unit, which makes server chips reported $6.38 billion in revenue and was more than the $5.62 billion that Wall Street analysts’ were looking for.  Intel’s division that makes computing products for industries and embedded systems reported $1.23 billion in revenue vs. Wall Street analysts’ expectations of $1.12 billion.

Intel also gave an update of its full-year guidance. The company now expects its earnings per share to come in at $4.60 vs. Wall Street analysts’ expectations of $4.39 per share. Intel also raised its revenue guidance to $71 billion which was higher than the street was looking for at $69.43 billion.

The above image is a longer-term weekly chart of Intel’s stock over the last seven years.  The stock had a good start in 2013 trading positively all year and slowly stair-stepping higher. Throughout most of 2014 and 2015, Intel began to form a head and shoulders reversal pattern.  Head and shoulders patterns usually occur after rallies are beginning to exhaust.  The stock begins to top and sellers come in at highs forming a left shoulder, then a move lower occurs, creating the start of a neckline. Buyers come back into the market and rally the stock to new highs forming the head. Sellers come in at the new high, bring the stock lower, and the downside (neckline) is tested again.  The market rallies one more time, fails to break the high and then forms the right shoulder.  The pattern is confirmed once it breaks through the neckline.

Intel spent the rest of 2015 and 2016 trading sideways, without real direction due to a lack of fundamental catalysts. Late in the fourth quarter of 2017, Intel broke out from a consolidation wedge led by a solid earnings release and proceeded to rally over 40% before finding some resistance just below the $58.00 dollar price level. The stock has been stuck in a two-year trading range between the levels of roughly $44.00 and $58.00. Currently, Intel is positive for the year and trading above both its 100- and 200-week moving averages.

(Chart above courtesy of ​​)

Based on a survey of twenty-three analysts offering 12-month price targets, the average price target for Intel’s stock is $55.17. According to that number, the stock is priced at a slight discount relative to Wall Street’s analysts and could be considered undervalued around current levels near $56.71.

Investors in Intel should look to their next earnings release on January 26th for fresh news within the company.


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