The fourth quarter was a bad one for semiconductor stocks. While the market as a whole struggled as well, semiconductor stocks took an extra painful drumming led by Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). Intel (NASDAQ:INTC) stock, however, was largely spared from the selling.
The trade war with China has not improved sentiment on Wall Street and in particular, with semi stocks. Because Intel stock has weathered the storm so well though, investors are optimistic about its fourth-quarter earnings results coming up on Jan. 24 after the close.
Intel Stock Earnings
Analysts expect the company to earn $1.22 per share this quarter and $4.53 for the year. Those numbers are up notably over the last 90 days, from $1.09 and $4.16 per share, respectively. Presently, these estimates call for 13% year-over-year (YoY) growth for Q4 and over 30% growth for the year.
On the revenue front, analysts expect sales of $19.01 billion for the quarter and $71.2 billion for the full year. If achieved, it will represent YoY growth of 11.5% and 13.4%, respectively.
Should investors worry about Intel reporting a quarter like Nvidia or AMD, surprising the Street with a big revenue miss and poor guidance? I wouldn’t expect it. I still like those companies for the long-term, but let’s not forget that they were big crypto plays and once that revenue stream was shut off, they were left with a glut of inventory. Intel’s not in the same boat and as a result, I wouldn’t expect the same hangover.
It’s also expected that Intel will raise its dividend. Last year, management bumped its quarterly payout by roughly 10% to 30 cents per share. Intel stock currently yields 2.5%.
Evaluating Intel
In Q2 there were some concerns about Intel, but those worries were wiped away when it reported third-quarter results. Earnings of $1.40 per share came in 25 cents per share ahead of expectations, while revenue of $19.16 billion came in more than $1 billion above estimates. Guidance also came in ahead of expectations.
Would management give guidance that would be too hard to hit? Ordinarily not. So one would think that another beat could be in store, which would be necessary to spring Intel stock higher from here. Either way though, optimism from last quarter is surely making investors feel good about the coming quarter.
That said, I would feel better about Intel if we had more certainty with its CEO. When the company finds a permanent replacement for former CEO Brian Krzanich, then investors will likely feel more comfortable owning the stock.
Trading INTC Stock
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Shares of INTC stock have been trading relatively well and have certainly held up better than peers like Nvidia and AMD. In fact, unlike most stocks, Intel didn’t put in a low near Christmas Eve. Instead it put in a higher low, a bullish development.
As Intel stock slowly but surely grinds higher, it keeps bumping into the 200-day as resistance, right near this $49 to $50 level. What can we expect for earnings?
A positive reaction likely thrusts Intel stock over this level. A close over $50 is bullish and will bring in buyers looking to push INTC higher. A negative reaction could thrust INTC stock below the 21-day and 50-day moving averages. If Intel pulls back but holds these moving averages, I would consider it a possible long setup. If these levels fail, wait for a test of uptrend support (purple line) near $44 to $45.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long NVDA.
