Intel’s stock has been surging this year thanks to the recovering PC market and analysts still remain optimistic. Rising estimates sent the stock to Zacks Rank # 1 (Strong Buy) on July 1.
About the Company
Based in Santa Clara, California, Intel Corporation (NASDAQ:INTC) is one of the leading producers of microprocessors in the world. The company supplies microprocessors, motherboards, and system building blocks that are integral to computers, servers, and networking and communications products.
The company has been through hard times of late as consumer preference shifted from personal computers to tablets and smartphones.
Solid First Quarter Results and Raised Guidance
Intel reported first-quarter earnings of $0.38 per share, a penny above the Zacks Consensus Estimate of $0.37 per share. Slightly better-than-expected gross profit margin drove the surprise.
PC client platform unit volume as well as Mobile unit volume were up year-over-year, while desktop units were flat.
Data Center revenue increased 11% year-over-year while cloud, networking and storage were all up more than 20%. The new “Internet of Things” Group, surged 32% year-over-year, thanks to strong demand in in-vehicle infotainment and retail.
On June 12, INTC raised its guidance for the second quarter and full-year driven mostly by stronger than expected demand for business PCs. The company now expects Q2 revenue to be $13.7 billion, plus or minus $300 million, better than the previous guidance range of $13.0 billion, plus or minus $500 million and gross margin range to 64%, plus or minus a couple percentage points.
The company is trying to build a position in Mobility segment with a target of selling 40 million tablet units this year. As they continue to make architectural improvements, they will be in a better position to target smartphones as well.
The company is also actively working on new opportunities presented by wearable devices and everyday products known as the “Internet of Things”.
Positive Earnings Estimates Revisions
After impressive earnings, current and the next year estimates have been raised by analysts. Zacks Consensus Estimates are for FY 2014 and FY 2015 are now $2.04 per share and $2.18 per share, up from $1.90 per share and $2.05 per share, 30 days ago.Rising estimates helped INTC to earn a Zacks Rank #1 (Strong Buy).
Solid Industry Outlook
Semiconductor industry is currently ranked 30 out of 265 (top 11%) among Zacks industries.
The Bottom Line
Intel stock is more than 22% about year-to-date, significantly outperforming the S&P 500 index which is up about 7.8%. But with its strong earnings potential and still attractive valuation, the stock looks poised for further upside.
- INTEL CORP: Free Stock Analysis Report (email registration required)