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Headquartered in Santa Clara, CA, Intel is one of the largest chipmakers in the world. Client Computing Group (55% of 2016 revenues) and Data Center Group (29%) are their largest segments. Of late, the company has increased its presence in high growth areas like data centers, self-driving cars, artificial intelligence and the Internet of Things.
The chipmaker announced the acquisition of Israeli tech company Mobileye, which makes sensors for autonomous cars, earlier this year.
Strong Results
The company reported very strong results for Q3, beating on both the top and bottom lines and also raising the guidance for the year.
The data center, Internet of Things and memory businesses reported strong growth with record revenues.
"We executed well in the third quarter with strong results across the business, and we’re on track to a record year,” said the CEO. “Intel’s product line-up is the strongest it has ever been with more innovation on the way for artificial intelligence, autonomous driving and more.”
Shares soared more than 7% to a 17-year high.
Surging Estimates
Analysts have been raising their estimates for the company after strong results. Zacks Consensus Estimates for the current and next year have surged to $3.21 and $3.26 from $3.01 and $3.11, before the results.
The chipmaker has never missed in the last five years.
Headquartered in Benton Harbor, MI, Whirlpool Corporation is one of the largest manufacturers of home appliances in the world. The company’s portfolio of products includes laundry appliances, refrigerators and freezers, cooking appliances, and other small household appliances such as dishwashers and mixers.
Disappointing Results
The company reported disappointing Q3 results—missing on both the top and bottom lines. Adjusted EPS of $3.83 was short of the Zacks Consensus Estimate of $3.90. This was their fifth consecutive earnings miss and second straight revenue miss.
"We are pleased with our revenue growth and free cash flow improvement but are not satisfied with our operating margins, which were impacted by raw material inflation, unfavorable price/mix and slow progress on our European integration," said the CEO.
The management also reduced earnings guidance for 2017 due to rising costs and unfavorable price/mix. Shares plunged after the report.
Falling Estimates
Analysts have lowered their estimates for the company after weak earnings. Zacks Consensus Estimates for the current and the next fiscal year have fallen to $13.86 per share and $15.79 per share from $14.62 and $17.18 respectively, before the results.
Additional content:
Apple Smashes Estimates, Starbucks Lukewarm
Exposure to the World Matters: November Strategy Update
In 2016, S&P500 companies got over 43% of revenues from abroad. And in 2016, the percentage of S&P 500 sales from foreign countries decreased for the 2nd year in a row, after increasing for three consecutive years. The overall rate for 2016 was 43.2%, down from 44.3% in 2015 and 47.8% in 2014, at least an 11-year record high. THAT’S +4.6% TO EARN BACK!!!
2017 will surely be better!
U.S. Market Outlook
In this month’s U.S. outlook, I want to show you how “uber” bullish stock strategists out there have pushed this bull market forward, using the Trump tax trade as fodder. Paul Dietrich at Fairfax Global Markets in Middleburg VA, had this to say on Oct. 30th, 2017 in Seeking Alpha…
“Is the U.S. Stock Market Overvalued? If Congress passes their tax reform legislation, it is expected that corporate tax rates will be lowered from a high of 35% to 20%. The savings in corporate taxes will flow directly to corporate earnings. Here is how the tax reform legislation could affect the average P/E ratio of the S&P500 Index:
· According to FactSet, the current forward PE ratio of the S&P 500 Index is 17.9. (Source: FactSet 10/20/2017)
· According to Standard & Poor’s data, S&P 500 earnings for 2018 are estimated to be $144.88 per share. (Source: S&P 9/13/2017)
· The average S&P500 company currently pays 24.17% in taxes. If that rate is lowered to 20%, the average S&P500 company will receive a 4.17% reduction in taxes on revenues of an average of $12.21, that should go directly to increased earnings.
· The result is a 2018 S&P500 forward P/E ratio of 15.9. if one adds the $12.21 to estimated 2018 S&P 500 earnings of $144.88 or $157.09.
· A P/E ratio of 15.9 completely changes the valuation of the stock market. It no longer looks overpriced! According to FactSet the average forward 12-month PE ratio over 5-years is 15.6.
· While the average S&P500 company currently pays 24.17% in taxes, many companies in the S&P500 make most of their revenues primarily in the United States and many of these companies pay the higher 35% tax rate. These companies will benefit the most from this tax reform and some will get a tax break of almost 15% on their revenues and that money will go directly to earnings and will change many companies price-earnings ratios dramatically.”
Want My Tax Cut Critique?
The latest S&P500 2017 earnings track $130.88. 2018 expectations are at $145.81. That’s a difference of $14.93. These usually get cut back over time.
Paul says $12.21 could come from tax policy. Take it away from $14.93? You get $2.62 -- for standalone earnings growth. That’s a scary evaporation downside. A 20% probability is what the Predict-It people have for a chance of tax passage by Thanksgiving.
Maybe cut that tax gain in half? $6.10. Offer +5% earnings growth, without a tax gain? That’s $6.54. Hence, 2018 earnings are set to be $136.98 without any tax gain. With the S&500 trading at 2575 right now? The corrected 12-month forward P/E is 20 without any tax gain. It is a forward P/E ratio of 17.94 -- with a tax gain added of $6.10.
November Sector/Industry/Company Telescope
November shows: Exposure to the rest of the world matters! S&P keeps track of global exposure. And the 2016 data show the truth is this: the globally exposed sectors are heating up. The domestic ones are falling back.
According to S&P, the Energy sector maintained the title it took last year of leader in exposure to foreign sales, as its domestic sales fell. The sector reported 58.88% of its sales as foreign in 2016, up from 2015’s 57.88% and 2014’s 56.23%. Oil & Gas Conglomerates are the most globally exposed here.
Info Tech’s exposure declined to 57.15% in 2016 from the previous year’s 57.78%, both of which were a tick below energy’s; in 2014 the sector posted 59.39% in foreign sales. Semis are the most globally exposed here.
Go to the back of the pack. In terms of its sector-level representation of total sales, Consumer Staples represented 18.49% of all foreign sales, up from 14.08% in 2015. It was downgraded this month. ‘Nuff said there.
(1) Info Tech stays HOT, and Very Attractive. Semiconductors are the leader of ALL industries across the board. Computer Software-services is also strong.
Top Pick: Cray
Cray Inc. is engaged in designing, developing, manufacturing, marketing and servicing the high performance computing (HPC) market, primarily categories of systems known as supercomputers.
(2) Materials rise to Very Attractive. The leaders are Metals Non-ferrous and Paper and Chemicals.
Top Pick: Kururay
Kuraray Co., Ltd. engages in commercializing chemicals and resins, fibers and textiles, high performance material, medical products and others. It operates in three segments: Chemicals and Resins; Fibers and Textiles; and High-Performance Materials, Medical Products, and Others (HMM). Headquarters is in Tokyo, Japan.
(3) Consumer Discretionary stays a Very Attractive. Leaders are Other Cons-Discretionary, Apparel, Non-Food Retail/Wholesale, and Leisure.
Top Pick: Lion’s Gate
Lions Gate Entertainment Corp. is an entertainment company with a presence in motion picture production and distribution, television programming and syndication, home entertainment, digital distribution and new channel platforms. This company is based in Santa Monica CA and Vancouver BC.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius. Click for details >>
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Intel, Whirlpool, Cray, Kururay and Lion's Gate highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 6, 2017 – Zacks Equity Research highlights Intel (INTC - Free Report) as the Bull of the Day and Whirlpool Corporation (WHR - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Cray , Kururay (KURRY - Free Report) and Lion’s Gate (LGF.A - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Headquartered in Santa Clara, CA, Intel is one of the largest chipmakers in the world. Client Computing Group (55% of 2016 revenues) and Data Center Group (29%) are their largest segments. Of late, the company has increased its presence in high growth areas like data centers, self-driving cars, artificial intelligence and the Internet of Things.
The chipmaker announced the acquisition of Israeli tech company Mobileye, which makes sensors for autonomous cars, earlier this year.
Strong Results
The company reported very strong results for Q3, beating on both the top and bottom lines and also raising the guidance for the year.
The data center, Internet of Things and memory businesses reported strong growth with record revenues.
"We executed well in the third quarter with strong results across the business, and we’re on track to a record year,” said the CEO. “Intel’s product line-up is the strongest it has ever been with more innovation on the way for artificial intelligence, autonomous driving and more.”
Shares soared more than 7% to a 17-year high.
Surging Estimates
Analysts have been raising their estimates for the company after strong results. Zacks Consensus Estimates for the current and next year have surged to $3.21 and $3.26 from $3.01 and $3.11, before the results.
The chipmaker has never missed in the last five years.
Bear of the Day:
Headquartered in Benton Harbor, MI, Whirlpool Corporation is one of the largest manufacturers of home appliances in the world. The company’s portfolio of products includes laundry appliances, refrigerators and freezers, cooking appliances, and other small household appliances such as dishwashers and mixers.
Disappointing Results
The company reported disappointing Q3 results—missing on both the top and bottom lines. Adjusted EPS of $3.83 was short of the Zacks Consensus Estimate of $3.90. This was their fifth consecutive earnings miss and second straight revenue miss.
"We are pleased with our revenue growth and free cash flow improvement but are not satisfied with our operating margins, which were impacted by raw material inflation, unfavorable price/mix and slow progress on our European integration," said the CEO.
The management also reduced earnings guidance for 2017 due to rising costs and unfavorable price/mix. Shares plunged after the report.
Falling Estimates
Analysts have lowered their estimates for the company after weak earnings. Zacks Consensus Estimates for the current and the next fiscal year have fallen to $13.86 per share and $15.79 per share from $14.62 and $17.18 respectively, before the results.
Additional content:
Apple Smashes Estimates, Starbucks Lukewarm
Exposure to the World Matters: November Strategy Update
The following is an excerpt from Zacks Chief Strategist John Blank’s full Nov Market Strategy report To access the full PDF, click here.
World Growth in Focus
In 2016, S&P500 companies got over 43% of revenues from abroad. And in 2016, the percentage of S&P 500 sales from foreign countries decreased for the 2nd year in a row, after increasing for three consecutive years. The overall rate for 2016 was 43.2%, down from 44.3% in 2015 and 47.8% in 2014, at least an 11-year record high.
THAT’S +4.6% TO EARN BACK!!!
2017 will surely be better!
U.S. Market Outlook
In this month’s U.S. outlook, I want to show you how “uber” bullish stock strategists out there have pushed this bull market forward, using the Trump tax trade as fodder.
Paul Dietrich at Fairfax Global Markets in Middleburg VA, had this to say on Oct. 30th, 2017 in Seeking Alpha…
“Is the U.S. Stock Market Overvalued? If Congress passes their tax reform legislation, it is expected that corporate tax rates will be lowered from a high of 35% to 20%. The savings in corporate taxes will flow directly to corporate earnings. Here is how the tax reform legislation could affect the average P/E ratio of the S&P500 Index:
· According to FactSet, the current forward PE ratio of the S&P 500 Index is 17.9. (Source: FactSet 10/20/2017)
· According to Standard & Poor’s data, S&P 500 earnings for 2018 are estimated to be $144.88 per share. (Source: S&P 9/13/2017)
· The average S&P500 company currently pays 24.17% in taxes. If that rate is lowered to 20%, the average S&P500 company will receive a 4.17% reduction in taxes on revenues of an average of $12.21, that should go directly to increased earnings.
· The result is a 2018 S&P500 forward P/E ratio of 15.9. if one adds the $12.21 to estimated 2018 S&P 500 earnings of $144.88 or $157.09.
· A P/E ratio of 15.9 completely changes the valuation of the stock market. It no longer looks overpriced! According to FactSet the average forward 12-month PE ratio over 5-years is 15.6.
· While the average S&P500 company currently pays 24.17% in taxes, many companies in the S&P500 make most of their revenues primarily in the United States and many of these companies pay the higher 35% tax rate. These companies will benefit the most from this tax reform and some will get a tax break of almost 15% on their revenues and that money will go directly to earnings and will change many companies price-earnings ratios dramatically.”
Want My Tax Cut Critique?
The latest S&P500 2017 earnings track $130.88. 2018 expectations are at $145.81. That’s a difference of $14.93. These usually get cut back over time.
Paul says $12.21 could come from tax policy. Take it away from $14.93? You get $2.62 -- for standalone earnings growth. That’s a scary evaporation downside. A 20% probability is what the Predict-It people have for a chance of tax passage by Thanksgiving.
Maybe cut that tax gain in half? $6.10. Offer +5% earnings growth, without a tax gain? That’s $6.54. Hence, 2018 earnings are set to be $136.98 without any tax gain. With the S&500 trading at 2575 right now? The corrected 12-month forward P/E is 20 without any tax gain. It is a forward P/E ratio of 17.94 -- with a tax gain added of $6.10.
November Sector/Industry/Company Telescope
November shows: Exposure to the rest of the world matters!
S&P keeps track of global exposure. And the 2016 data show the truth is this: the globally exposed sectors are heating up. The domestic ones are falling back.
According to S&P, the Energy sector maintained the title it took last year of leader in exposure to foreign sales, as its domestic sales fell. The sector reported 58.88% of its sales as foreign in 2016, up from 2015’s 57.88% and 2014’s 56.23%. Oil & Gas Conglomerates are the most globally exposed here.
Info Tech’s exposure declined to 57.15% in 2016 from the previous year’s 57.78%, both of which were a tick below energy’s; in 2014 the sector posted 59.39% in foreign sales. Semis are the most globally exposed here.
Go to the back of the pack. In terms of its sector-level representation of total sales, Consumer Staples represented 18.49% of all foreign sales, up from 14.08% in 2015. It was downgraded this month. ‘Nuff said there.
(1) Info Tech stays HOT, and Very Attractive. Semiconductors are the leader of ALL industries across the board. Computer Software-services is also strong.
Top Pick: Cray
Cray Inc. is engaged in designing, developing, manufacturing, marketing and servicing the high performance computing (HPC) market, primarily categories of systems known as supercomputers.
(2) Materials rise to Very Attractive. The leaders are Metals Non-ferrous and Paper and Chemicals.
Top Pick: Kururay
Kuraray Co., Ltd. engages in commercializing chemicals and resins, fibers and textiles, high performance material, medical products and others. It operates in three segments: Chemicals and Resins; Fibers and Textiles; and High-Performance Materials, Medical Products, and Others (HMM). Headquarters is in Tokyo, Japan.
(3) Consumer Discretionary stays a Very Attractive. Leaders are Other Cons-Discretionary, Apparel, Non-Food Retail/Wholesale, and Leisure.
Top Pick: Lion’s Gate
Lions Gate Entertainment Corp. is an entertainment company with a presence in motion picture production and distribution, television programming and syndication, home entertainment, digital distribution and new channel platforms. This company is based in Santa Monica CA and Vancouver BC.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius. Click for details >>
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think. See This Ticker Free >>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Follow us on Twitter: http://twitter.com/zacksresearch
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.