In the past I wrote about Intel (INTC) bullishly, stating that the stock is extremely cheap with growth prospects still ahead of it. Since then, the stock has done absolutely nothing even as the broader market has gone much higher. Yesterday, the company reported outstanding results and painted a rosy picture. Is this enough to finally get the stock to go up?
Great Quarter
Intel earned 56 cents per share in the first quarter, which was a full dime ahead of analyst expectations. Sales also jumped 25% over last year to $12.8 billion and were well above analyst views of $11.6 billion. These are huge beats for a company the size of Intel. The company said that strong corporate demand was the key to posting such strong results. This chart courtesy of Stephen Rosenman via Seeking Alpha speaks volumes:
Do these numbers look like a stock that should be valued at 9x forward earnings? Look at the last column, in which revenues soared 25% and net income grew 34%. That is phenomenal work by management to grow this much of such a big base in what many are calling a weak market for personal computers. There was nothing weak about this quarter.
Management guided revenues to be about a billion dollars higher than the consensus estimate for next quarter, which shows the party should continue. The stock will get a nice boost on Wednesday, but can it continue after that? I see no reason it shouldn’t, but then again I have been bullish on the stock for a long time and nothing has happened.
I think the magnitude of this quarter’s beat should open the eyes of a lot of investors, both growth and value. It also pays a strong dividend of 3.70%, especially for a technology company. This stock has a little bit for everybody as it is a terrific value play and now its growth has started to kick in again. The rosy glow from this quarter and the outlook should push it to $25 in the near term, and over $30 with a couple more quarters of strong growth. I hate to say it again, but there is no doubt that Intel is back.
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