Back to top

Analyst Blog

Intel Corp. (INTC - Analyst Report) is set to report fourth quarter 2012 results on January 17. Last quarter it posted a +20% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Intel primarily sells chips, which are used in notebooks, netbooks and desktop computers. The transition to tablets and mobile devices has led to lower PC sales, impacting the company’s results through 2012. The slow demand for PCs also impacted pricing, leading to weaker margins.

Despite the launch of Windows 8, PC sales fell 4.3% in the fourth quarter according to a very recent report from Gartner. The research firm attributed the decline to tablet cannibalization. We believe that the effect of weak PC demand on Intel sales will likely be long-lived.

However, with the changing dynamics, Intel is focusing on producing chips for mobile Internet applications, which we believe will account for most of Intel’s growth in the coming years. Also, the company’s focus on its fourth-generation core processors and the new processors which will be incorporated into the refreshed versions of Apple’s (AAPL - Analyst Report) MacBook Pro and MacBook Air, might bringa sigh of relief in the latter half of the year.

Earnings Whispers?

Our proven model does not conclusively show that Intel is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, #2 or #3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: The Most Accurate estimate stands at $0.44 while the Zacks Consensus Estimate is higher at $0.45. That is a difference of -2.22%.

Zacks Rank #3 (Hold): Intel’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

About Earnings ESP

Would you like to own more stocks likely to beat their next earnings report? And avoid stocks likely to disappoint?

If yes, then it’s time you learn about the Earnings ESP score available on Zacks.com.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%