Trade of the Day: Intel Corporation (INTC) Stock’s Earnings Dip Is an Opportunity

Intel Corporation (NASDAQ:INTC) — Yesterday, after the close, this large-cap value stock and member of the Dow Jones Industrial Average reported earnings of 61 cents. On an adjusted basis, it earned 66 cents. Revenue grew 7% to $14.8 billion, a small gain on earnings from FactSet’s survey of analysts that expected 65 cents on revenue of $14.81 billion.

However, despite beating quarterly estimates coupled with a positive interview of its CFO on CNBC, the stock fell in after-hours trading. The company projects second-quarter revenue to increase and earnings to improve to about 68 cents, which is slightly above analysts’ expectations. For this year Intel projects revenues of $60 billion and an adjusted EPS of $2.85.

Standard & Poor’s has an EPS estimate of $2.94 for 2018.

Although headwinds exist from an overall decline in PC sales, Intel is forecast to experience growth from within the “Internet of Things” and an expanding data center growth from its cloud investments. The company’s plan to acquire Mobileye NV (NYSE:MBLY), a leader in the high-growth market for autonomous vehicles should offset any declines in PC chip sales. Curiously its Q1 revenue increase was helped by a slight increase in PC sales.

Technically INTC is currently consolidating in a right triangle. Yesterday’s high at $37.50 almost touched the resistance line of the triangle, and aftermarket trading reversed prices back to support at the $36 area. Closing volume was above average, and the MACD indicator is in positive territory.

Try to buy INTC at about $36 for a trade to $42 and a proposed return of over 16%.

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Trade of the Day: Intel Corporation (INTC) Stock's Earnings Dip Is an Opportunity

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