The Exchange

Here’s What Hedge Fund Analysts Expect for Intel

The Exchange

Leigh Drogen is CEO of Estimize, an open financial estimates platform which facilitates the aggregation of fundamental estimates from independent, buy-side, and sell-side analysts, along with those of private investors and students.

Intel Corporation (INTC) has always been a power player in the chip industry, periodically releasing powerful updates to its technologies and creating profitable agreements with other tech companies that have been reliant on INTC’s technology. And as technology slowly transitions to more mobile platforms from PCs, which is currently INTC’s biggest revenue source, INTC also begun the transition of developing more technology for mobiles and tablets. INTC is a company of innovation and it isn’t a surprise that analysts are expecting INTC to increase revenue in this upcoming quarterly report.

Intel is expected to report FQ4 2013 earnings on January 16th. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

The current Wall Street consensus expectation is for INTC to report $0.52 EPS and $13.725B revenue while the current Estimize consensus from 20 Buy Side and Independent contributing analysts is $0.54 EPS and $13.823B revenue. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we’re seeing a smaller differential between the Estimize and Wall Street numbers compared to previous quarters.

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Over the past four months the Wall Street consensus trend for EPS has decreased from $0.53 to $0.52 while Wall Street revenue expectations have increased from $13.423B to $13.725B. The Estimize EPS and revenue consensus have increased this quarter with EPS going from $0.52 to $0.54 and revenue increasing from $13.366B to $13.823B.

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Over the previous 6 quarters, INTC has beaten the Wall Street consensus for EPS and revenue every time. Over the same time period INTC has beaten the Estimize EPS consensus 5 times and the Estimize Revenue every time.

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The distribution of estimates published by analysts on Estimize range from $0.52 to $0.57 EPS and $13.714B to $14.425B revenues. We’re seeing a smaller distribution of estimates this quarter for INTC than normal. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A narrower distribution signaling the potential for greater volatility post earnings, a wider vice versa.

The analyst with the highest estimate confidence rating this quarter is Davis who projects $0.54 EPS and $13.754B in revenue. Estimate confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy.

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INTC is set to set significant highs in its revenue this quarter. However, as the death of the personal computer begins creeping on INTC, INTC will need to ramp up the development of its mobile technologies. With chips for personal computers making up a large chunk of INTC’s revenues, expect revenues to fall if INTC fails to innovate. That’s why one can also expect INTC to begin delving deeper into the mobile space and challenging companies like ARM (ARMH) who have had a long presence in the industry for survival.

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