Intel Corporation (INTC) is a leading semiconductor chip manufacturer that markets essential semiconductor technologies for the cloud and smart and connected devices worldwide. The segments through which it operates include: DCG, IOTG, Mobileye, NSG, PSG, and CCG.
Although INTC has been struggling in recent years due to growing competition in the semiconductor space and delays in its chip production, the company’s recent CEO change should help leverage its unmatched resources in defending its leading CPU market share. We think INTC’s growth trajectory should improve significantly as it pushes forward on AI chip innovation as consumers switch to smart devices, smart homes, and smart cities, all of which require AI chips.
INTC’s technological innovations and its strong product portfolio have driven it to a 15.6% gain year-to-date. This performance, combined with several other factors, has helped INTC earn a “Buy” rating in our proprietary rating system.
Here’s how our proprietary POWR Ratings system evaluates INTC:
Trade Grade: B
INTC is currently trading above its 50-day and 200-day moving averages of $48.69 and $53.48, respectively, indicating that the stock is in an uptrend. Also, the stock has gained 10.6%, over the past three months, reflecting short-term bullishness.
INTC’s PC-centric revenue has increased 1% year-over-year to $9.80 billion for the third quarter ended September 30, 2020. The company’s cloud revenue has grown 15% from its year-ago value on continued demand for support services in a work- and learn-at-home environment.
On January 13, INTC announced the appointment of 40-year technology industry leader, Pat Gelsinger, as its new chief executive officer. The key reason for the leadership change is to drive the company’s growth efforts more aggressively, allowing it to capitalize on market shifts and extend its reach into new, fast-growing markets.
INTC recently launched its 11th Gen Intel Core vPro platform and Intel Evo vPro platform that will deliver the highest performance and most comprehensive hardware-based security. It also introduced a new N-series 10-nanometer Intel Pentium Silver and Intel Celeron processors.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, INTC is well positioned. The stock is currently trading 16.9% below its 52-week high of $69.29, which it hit on January 24, 2020.
INTC’s net revenue has grown at a CAGR of 8% over the past three years, while its net income grew at a CAGR of 16.6% over this period. INTC’s EPS has grown at a CAGR of 21.5% over the past three years. This can be attributed to the continued data-centric demand to support vital services and the company’s introduction of innovative products.
Peer Grade: D
INTC is currently ranked #65 of 99 stocks in the Semiconductor & Wireless Chip industry. Other popular stocks in this industry are Taiwan Semiconductor Manufacturing Company Ltd. (TSM), Applied Materials, Inc. (AMAT) and ASE Technology Holding Co. (ASX)
AMAT, ASX, and TSM have gained 19.5%, 21.8%, and 14.9%, respectively, year-to-date. This compares to INTC’s 15.6% returns over this period.
Industry Rank: A
The Semiconductor & Wireless Chip industry is ranked #2 of the 123 StockNews.com industries. The companies in this industry manufacture computer chips and other components used in electronic devices, as well as wafer processing equipment, semiconductor assembly and packaging equipment, and other machinery used to produce semiconductors.
An increasing need for cloud services and higher internet traffic as more people work from home should spur the demand for devices produced by industry participants. In fact, the industry underpins some of today’s key segments, including medical and healthcare and several complementing technologies, such as AI and 5G. These factors should contribute significantly to the industry’s overall growth.
Overall POWR Rating: B (Buy)
INTC is rated “Buy” due to its impressive financials, short- and long-term bullishness, and underlying industry strength, as determined by the four components of our overall POWR Rating.
Although shares of INTC tanked last year due to delays in chip production and supply chain disruption amid the COVID-19 pandemic, the company is expected to revamp its business, improve process technology, and regain customers with a new CEO taking charge in February. Meanwhile, rapidly growing trends in the field of AI and 5G should position the company well to outperform the market.
Analyst sentiment, which gives a good sense of a stock’s future price movement, is good for INTC. It has an average broker rating of 2.05, indicating favorable analyst sentiment. Moreover, INTC has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters.
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INTC shares were trading at $57.68 per share on Tuesday morning, up $0.10 (+0.17%). Year-to-date, INTC has gained 15.78%, versus a 0.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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