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Of late, shares of Intel INTC have been gaining solid momentum. This rally can be attributed to the company’s expanding product portfolio as well as frequent product launches.
Further, the improvement was driven by impressive results from the Data Center Group (“DCG”), Internet-of-Things Group (“IOTG”), Non-Volatile Memory Solutions (“NSG”) and Programmable Solutions Group (“PSG”). These segments along with MobilEye form the crux of Intel’s data-centric business model, which contributed almost 50% of total revenues.
Further, strong fundamentals and encouraging fiscal 2018 outlookdrove its shares higher.
The company launched several new 8th Gen Intel Core processors recently, which included Intel Core i9 processor for laptops, IntelCore vPro processors for business, and Intel Core i7-8086K limited-edition processor for gaming.
The company also unveiled a new solid state drive (“SSD”) boasting a storage capacity of 32 terabytes (“TB”). The new drive, Intel SSD DC P4500, is developed on the company’s 3D NAND technology. The compact device is claimed to be Intel’s “densest drive ever”.
The new SSD underscores Intel’s growing interest in this highly promising space. It appears that the company is flexing its muscles in the storage space against prominent players, comprising Western Digital WDC and Seagate among others.
Intel is also leaving no stone unturned to position itself as a notable provider of 5G wireless infrastructure. Intel continues to gain share as customers choose to transform their respective networks enabling 5G transition leveraging the company’s architecture. The company recently collaborated with SiTime Corporation in a bid to add Micro-Electrical-Mechanical Systems (“MEMS”) timing solutions capabilities to its 5G modem platforms.
The company has started testing autonomous vehicles in Israel and is anticipated to expand trials in other geographies soon. Further, it recently collaborated with Mapbox, a mapping startup. This move bodes well for the company and should help it to stay ahead of competition from Qualcomm QCOM and NVIDIA NVDA.
Mobileye’s Responsibility Sensitive Safety (“RSS”) software and EyeQ5 technology was recently selected for Baidu’s Apollo self-driving platform. Going forward, Intel recently acquired Vertex.AI, a Seattle, WA-based startup. Vertex.AI will join Intel’s Artificial Intelligence Products Group.
Exploring new end-markets including self-driving, where the company is concentrating extensively, will help in expanding its total addressable market (“TAM”).
The company’s leading position in PCs, strength in servers, growing influence in software and IoT segments along with headway in process technology are all catalysts.
Notably, Intel’s stock has returned 39.2% over the past one year, outperforming the S&P 500’s rally of 18.4%.
On the valuation front too, the stock looks attractive. The company currently trades at a forward P/E multiple of 11.6x, significantly lower than the industry’s average of 16.3x. The ratio, which is obtained by dividing a stock’s current market price with its historical or estimated earnings, measures how much an investor needs to shell out per dollar of earnings. Consequently, lower the P/E of a stock, the better for a value investor.
Intel outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 19.9%.
Further, it has a long-term expected EPS growth rate of 8.4%.
We expect the trend to continue and drive the overall financial performance of this Zacks Rank #3 (Hold) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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