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Factors That Are Likely to Impact Intel's (INTC) Q4 Earnings
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Intel Corporation (INTC - Free Report) is set to report fourth-quarter fiscal 2017 results on Jan 25 after the closing bell.
Notably, the company has a positive record of earnings surprises in the trailing four quarters, with an average surprise of 9.75%. Last quarter, the company delivered a positive earnings surprise of 26.25%.
Last quarter, the company reported non-GAAP earnings of $1.01 per share, which beat the Zacks Consensus Estimate by 21 cents. The figure surged 26.3% from the year-ago quarter and 40.3% sequentially. The strong earnings growth was driven by better-than-expected top-line performance and operating margin expansion. Moreover, Intel Channel Alliance Program (ICAP) contributed 13 cents to quarterly earnings.
Revenues totaled $16.15 billion, up 2.4% year over year and 9.4% quarter over quarter. The figure beat the Zacks Consensus Estimate of $15.71 billion. After adjusting for the McAfee (formerly Intel Security Group) transaction, revenues grew 6%. The top-line growth came on the back of impressive results from the Data Center Group, Internet-of-Things Group, Non-Volatile Memory Solutions and Programmable Solutions Group, which contributed almost 44% of total revenues. These segments form the crux of Intel’s data-centric business model.
The company has gained just 21.6% in a year, underperforming the industry's growth of 50.4%.
What to Expect
Intel revised 2017 outlook based on double-digit growth expectation from data-centric businesses.
Intel guided fourth-quarter 2017 revenues of around $16.3 billion (+/-$500 million), up 3% year over year excluding McAfee. The Zacks Consensus Estimate for revenues is currently pegged at $16.30 billion. Earnings are anticipated to be 86 cents (+/- 5 cents) per share, up 15% on a year-over-year basis. The Zacks Consensus Estimate is currently pegged at 86 cents.
For fiscal 2017, management expects revenues of almost $ 62 billion (+/- $500 million), almost in line with the Zacks Consensus Estimate of $62.02 billion and up $700 million from previous expectation. Earnings are now anticipated to be $3.25 (+/- 5 cents) per share, up from previous guidance of $3.00. The Zacks Consensus Estimate is pegged at $3.25 per share.
The company’s results will benefit from stable PC trends, anticipated demand for newly launched Xeon Scalable processors and newly added products. Moreover, Intel’s expanding presence in the rapidly-growing autonomous vehicle market along with continued focus on developing more advanced artificial intelligence (AI) technologies for self-diving cars are key catalysts.
Let’s see how things are shaping up for this announcement.
Autonomous Vehicles & AI: Key Catalysts
Intel’s CEO Brian Krzanich during a ‘Prime Keynote’ in the CES 2018 talked about the company’s initiatives in driverless vehicles and powering AI technology through partnerships and strategic deals.
Intel revealed a number of partnerships in the space. At the event, the company announced few important partnerships — with BMW, Nissan, Volkswagen AG, and Ferrari — which exhibit Intel’s growing dominance in providing AI platforms which will power future vehicles.
It will also leverage Intel’s Mobileye-based mapping technology for improving self-driving cars navigation process.
Intel also joined forces with SAIC Motor and NavInfo to extend crowdsourced map building to China. Additionally, Intel is also moving ahead in the virtual reality (VR) and and non-VR gaming space. It collaborated with Paramount Pictures for the next-generation VR andnon-VR Challenger League.
Krzanich also added that Intel is collaborating with Ferrari North America to brings its AI technology to the Ferrari Challenge North America Series races to be held on six courses in the United States this year. The Ferrari Challenge will use Intel Xeon Scalable processors chips to enhance the experience to viewers online.
Intel is also partnering with Advanced Micro Devices’ (AMD - Free Report) Radeon Vega M GPUs with a purpose to utilize the GPUs in its next generation CPUs. All these efforts will contribute meaningfully to top-line growth in the upcoming quarter.
Product Rollouts to Drive Results
The company recently announced Intel Stratix, the industry’s first field programmable gate array (FPGA) integrated with high bandwidth memory to accelerate workloads and keep pace with data explosion.
The newly added product will expand the onboard memory pool and add more bandwidth. We believe that the launch will improve scalability, reliability, power and density requirements of future HPC deployments.
Intel also announced substantial advances in its wireless product portfolio to accelerate 5G adoptions, alongside introducing Intel XMM 8000 series and Intel XMM 7660 series modems. The launch of Xeon Scalable, Core 8 chips, Myriad X and next-generation desktop processors are also key catalysts.
We believe that growing demand for server chips that are used in data centers from cloud-based service providers like Amazon.com, Alphabet and Microsoft is a key catalyst for Intel. Moreover, the launch of Core 8 is expected to boost its PC market share.
Intel’s Security Flaw Poses Challenges
Intel has encountered two major security issues that could let attackers to access security keys, passwords, and cached files of a device's kernel memory. The two security flaws called Meltdown and Spectre could allow programs to steal data including passwords stored in a password manager or browser, personal photos, emails, instant messages and even business-critical documents.
The bug is apparently present in nearly every Intel CPU made within the last decade, and upcoming patches will negatively affect hardware performance. However, Microsoft, Apple and Linux programmers are rolling out patches to fix Linux and Windows kernels in order to address the vulnerability.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel carries a Zacks Rank #3 but its Earnings ESP is -0.09%. Consequently, our proven model does not conclusively show that the company is likely to deliver a positive surprise this quarter.
Stocks With Favorable Combination
Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Caterpillar, Inc. (CAT - Free Report) , with an Earnings ESP of +6.22% and a Zacks Rank of 2.
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.
Image: Bigstock
Factors That Are Likely to Impact Intel's (INTC) Q4 Earnings
Intel Corporation (INTC - Free Report) is set to report fourth-quarter fiscal 2017 results on Jan 25 after the closing bell.
Notably, the company has a positive record of earnings surprises in the trailing four quarters, with an average surprise of 9.75%. Last quarter, the company delivered a positive earnings surprise of 26.25%.
Last quarter, the company reported non-GAAP earnings of $1.01 per share, which beat the Zacks Consensus Estimate by 21 cents. The figure surged 26.3% from the year-ago quarter and 40.3% sequentially. The strong earnings growth was driven by better-than-expected top-line performance and operating margin expansion. Moreover, Intel Channel Alliance Program (ICAP) contributed 13 cents to quarterly earnings.
Revenues totaled $16.15 billion, up 2.4% year over year and 9.4% quarter over quarter. The figure beat the Zacks Consensus Estimate of $15.71 billion. After adjusting for the McAfee (formerly Intel Security Group) transaction, revenues grew 6%. The top-line growth came on the back of impressive results from the Data Center Group, Internet-of-Things Group, Non-Volatile Memory Solutions and Programmable Solutions Group, which contributed almost 44% of total revenues. These segments form the crux of Intel’s data-centric business model.
The company has gained just 21.6% in a year, underperforming the industry's growth of 50.4%.
What to Expect
Intel revised 2017 outlook based on double-digit growth expectation from data-centric businesses.
Intel guided fourth-quarter 2017 revenues of around $16.3 billion (+/-$500 million), up 3% year over year excluding McAfee. The Zacks Consensus Estimate for revenues is currently pegged at $16.30 billion. Earnings are anticipated to be 86 cents (+/- 5 cents) per share, up 15% on a year-over-year basis. The Zacks Consensus Estimate is currently pegged at 86 cents.
For fiscal 2017, management expects revenues of almost $ 62 billion (+/- $500 million), almost in line with the Zacks Consensus Estimate of $62.02 billion and up $700 million from previous expectation. Earnings are now anticipated to be $3.25 (+/- 5 cents) per share, up from previous guidance of $3.00. The Zacks Consensus Estimate is pegged at $3.25 per share.
The company’s results will benefit from stable PC trends, anticipated demand for newly launched Xeon Scalable processors and newly added products. Moreover, Intel’s expanding presence in the rapidly-growing autonomous vehicle market along with continued focus on developing more advanced artificial intelligence (AI) technologies for self-diving cars are key catalysts.
Let’s see how things are shaping up for this announcement.
Autonomous Vehicles & AI: Key Catalysts
Intel’s CEO Brian Krzanich during a ‘Prime Keynote’ in the CES 2018 talked about the company’s initiatives in driverless vehicles and powering AI technology through partnerships and strategic deals.
Intel revealed a number of partnerships in the space. At the event, the company announced few important partnerships — with BMW, Nissan, Volkswagen AG, and Ferrari — which exhibit Intel’s growing dominance in providing AI platforms which will power future vehicles.
It will also leverage Intel’s Mobileye-based mapping technology for improving self-driving cars navigation process.
Intel also joined forces with SAIC Motor and NavInfo to extend crowdsourced map building to China. Additionally, Intel is also moving ahead in the virtual reality (VR) and and non-VR gaming space. It collaborated with Paramount Pictures for the next-generation VR andnon-VR Challenger League.
Krzanich also added that Intel is collaborating with Ferrari North America to brings its AI technology to the Ferrari Challenge North America Series races to be held on six courses in the United States this year. The Ferrari Challenge will use Intel Xeon Scalable processors chips to enhance the experience to viewers online.
Intel is also partnering with Advanced Micro Devices’ (AMD - Free Report) Radeon Vega M GPUs with a purpose to utilize the GPUs in its next generation CPUs. All these efforts will contribute meaningfully to top-line growth in the upcoming quarter.
Product Rollouts to Drive Results
The company recently announced Intel Stratix, the industry’s first field programmable gate array (FPGA) integrated with high bandwidth memory to accelerate workloads and keep pace with data explosion.
The newly added product will expand the onboard memory pool and add more bandwidth. We believe that the launch will improve scalability, reliability, power and density requirements of future HPC deployments.
Intel also announced substantial advances in its wireless product portfolio to accelerate 5G adoptions, alongside introducing Intel XMM 8000 series and Intel XMM 7660 series modems. The launch of Xeon Scalable, Core 8 chips, Myriad X and next-generation desktop processors are also key catalysts.
We believe that growing demand for server chips that are used in data centers from cloud-based service providers like Amazon.com, Alphabet and Microsoft is a key catalyst for Intel. Moreover, the launch of Core 8 is expected to boost its PC market share.
Intel’s Security Flaw Poses Challenges
Intel has encountered two major security issues that could let attackers to access security keys, passwords, and cached files of a device's kernel memory. The two security flaws called Meltdown and Spectre could allow programs to steal data including passwords stored in a password manager or browser, personal photos, emails, instant messages and even business-critical documents.
The bug is apparently present in nearly every Intel CPU made within the last decade, and upcoming patches will negatively affect hardware performance. However, Microsoft, Apple and Linux programmers are rolling out patches to fix Linux and Windows kernels in order to address the vulnerability.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Intel carries a Zacks Rank #3 but its Earnings ESP is -0.09%. Consequently, our proven model does not conclusively show that the company is likely to deliver a positive surprise this quarter.
Stocks With Favorable Combination
Here are a couple of companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:
Western Digital Corporation (WDC - Free Report) , with an Earnings ESP of +0.83% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar, Inc. (CAT - Free Report) , with an Earnings ESP of +6.22% and a Zacks Rank of 2.
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 >>