Ahead of Intel’s (NASDAQ:INTC) earnings report, the stock traded steadily at $56-$58. On July 22, the stock fell by 5.3% after margin pressures concerned investors. Analysts were quick to cut price targets, a warning that is too late for existing shareholders.
Intel posted third-quarter gross margin forecasts of 55%. Analysts estimated a 55.8% gross margin. In Q2, it was 59.2%. The chip giant also raised its full-year revenue and earnings guidance. It expects earnings of $4.74 a share, implying an FY2021 price-to-earnings of just 11.18 times. The stock pays a dividend that yields 2.62%, ahead of that offered by Nvidia (NASDAQ:NVDA) at 0.33% and Qualcomm (NASDAQ:QCOM) at 1.88%. AMD (NASDAQ:AMD) stock does not have a dividend, as it continues to invest for growth by acquiring Xilinx (NASDAQ:XLNX).
Intel has positive catalysts from here. The chip shortage will sustain strong prices, despite hurting output. Intel is still developing 7nm manufacturing. When launched, margins will rebound to at least 59%.
Inflection Point
Intel benefited from record Q2 revenue from PC and Mobileye. PC platform volumes rose by 33% Y/Y. As shortages bottom out in the second half of the year, Intel will benefit from a catch-up period of 12-24 months.
After INTC stock dipped, consider starting a position.
