Intel Corporation (NASDAQ:INTC) is set to report first-quarter fiscal 2017 earnings results after the closing bell Thursday. And INTC stock, which has declined 2.5% in three months, is poised for a breakout north of $45 per share in the quarters ahead.
A Look Inside Intel
Intel CEO Brian Krzanich — in his fifth year at the helm — seems intent on putting Intel’s cash to use. The company’s $15.3 billion acquisition of Israeli self-driving technology company Mobileye NV (NYSE:MBLY) was the most recent example. This deal follows a $16.7 billion acquisition for Altera back in 2015.
All told, Intel is now in the driver’s seat with autonomous vehicles, thanks to Mobileye, which will allow it to better compete with Tesla Inc (NASDAQ:TSLA) and Google parent Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL).
What’s more, the company is no longer on the outside looking when it comes to smartphones. Aside from winning chip placement in Apple Inc.‘s (NASDAQ:AAPL) iPhone 7 and possibly future iPhones, Intel continues its push in the realm of Internet of Things and in the data center market.
Krzanich, who has found ways to get Intel’s top line growing again, has shown to have a good pulse on what the company needs. He’s done a solid job managing both Intel’s growth and the company’s costs. From my vantage point, these factors make INTC stock, which pays a 3% yield, a no-brainer buy (to steal a phrase from billionaire investor Carl Icahn). And the company’s earnings results Thursday, combined with solid guidance could be the catalyst to send INTC stock higher.
For the quarter that ended March, the Santa Clara, Calif.-based company is expected to earn 65 cents per share on revenue of $14.81 billion. This compares to the year-ago quarter when the company earned 54 cents per share on $13.8 billion in revenue. For the full year, ending in December, EPS is expected to rise 3% year over year to $2.80 per share, while full-year revenue of $59.93 billion would rise 0.8% year over year.
Beyond the revenue and EPS numbers, analysts will also focus on the extent to which the Data Center Group (DCG) segment, which contains server/networking, can offset the any pressure Intel might face this quarter in Client Computing Group, which contains its PC and mobile processor business.
Bottom Line for INTC Stock
Ahead of Thursday’s result, INTC stock has risen just 2% year to date, trailing the 6% rise in the S&P 500 index, suggesting there’s plenty of pessimism that the company, which has beaten analysts estimates on both the top and bottom lines in two straight quarters, will do so again. But with INTC stock priced at just 13 times fiscal 2017 estimates of the $2.80 per share, compared to a an 18 P/E for the S&P 500 index, these share should reach $45 in the next 12 to 18 months, delivering 22% returns.
As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.
