Intel’s (INTC) massive 11.68% post-earnings selloff is almost too predictable. After rallying before results, Intel would post either weak results or a downbeat forecast. Last week, Intel posted a weak outlook.
Intel reported revenue rising by a modest 4.6% Y/Y to $18.1 billion. It earned $1.71 a share (non-GAAP). For 2021, Intel raised its EPS and gross margin forecast. For the current fourth quarter, revenue will meet the consensus at $18.3 billion. EPS of $0.90 will trail the $0.94 guidance.
Investors may blame the data center revenue weakness hurting results. Looking ahead, investors must watch Intel’s new chip performance and foundry production. GlobalFoundries, Samsung, and Taiwan Semiconductor (NYSE:TSM) are increasing production. This will pressure Intel, which worries shareholders.
Accumulate Intel
Intel often recovers after a big selloff. Trading at below $50, Intel pays a dividend that yields 2.81%. Its forward P/E is 11 times. While rival AMD rallied on Intel’s fall, AMD is too expensive to consider at a 39 times forward P/E. If the Nasdaq corrects modestly AMD stock will fall by even more.
Intel has two positive catalysts ahead. It has a discrete GPU release and CPU refresh on the way. This will not lift the stock overnight. Patient value investors will get rewarded. Consider a position in Intel for at least six – 12 months.
