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Intel Shows Potential: Here's Why It Should Be on Your Radar

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Intel (INTC - Free Report) has been benefiting from robust performance of the Data Center Group, Internet-of-Things Group, Non-Volatile Memory Solutions and Programmable Solutions Group. These segments form the crux of Intel’s data-centric business model.

Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters with an average earnings surprise of 20%.

With expected long-term earnings per share growth rate of 8.4% and a market cap of $240.3 billion, the stock is a must-add to the investors’ portfolio at the moment.

Notably, the stock has rallied 20.9% in the last six months, outperforming the industry's gain of 12.5%.

Let’s take a look at the factors aiding the company’s performance.

Intel currently has a forward P/E ratio of 12.84x, significantly lower than the Zacks industry’s average of 18.9x. 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, the lower the P/E of a stock, the better it is for a value investor.

In the last 30 days, fiscal 2018 estimates were revised upward, driving the Zacks Consensus Estimate up from $3.84 per share to $4.02 per share.

Key Initiatives

Intel along with other tech giants recently revealed two new security bugs, namely Speculative Store Buffer Bypass or Variant 4 and Rogue System Registry Read. Consequently, this will mitigate the possibility of compromising cyber security.

Intel and Micron (MU - Free Report) had also announced the completion of qualification for the industry’s first 1Tb - 4bits/cell, or Quad-Level Cell (“QLC”) NAND dies on 64 layer 2nd Gen 3D NAND. This brings 33% greater density than the current generation 64 layer 3bits/cell (TLC) technology, enabling faster read-write speeds.

The chipmaker also revised second-quarter of fiscal 2018 guidance. The raised outlook bodes well. Moreover, the company is optimistic about delivering “another record year” in 2018.

Intel now envisions second-quarter fiscal 2018 revenues to come in at approximately $16.9 billion, up from the initial projection of $16.3 billion. The projected figure is better than the Zacks Consensus Estimate of $16.77 billion.

Earnings are now anticipated to be 99 cents per share, considerably higher than the previously estimated 85 cents per share. The Zacks Consensus Estimate is pegged at 99 cents.

Further, Intel, a comparatively late entrant in the autonomous driving industry, is increasing efforts in the space. The initiated testing of around 100 self-driving cars in Jerusalem deserves a special mention. Acquisition of Israel-based MobilEye, last year has been assisting the company a great deal. Recent collaboration with Mapbox, a mapping startup, also bodes well in this regard.

Notably, autonomous driving backed by AI is expected to reduce accidents due to human errors. Per a recent report by Grand View Research, the ADAS market is expected to hit $67.43 billion by 2025. Given the alluring prospects, the company can make the most of this growth opportunity if the cards are played right.

These aspects make us optimistic about this Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the broader technology sector are NVIDIA Corporation (NVDA - Free Report) and Mellanox Technologies, Ltd. (MLNX - Free Report) , both sporting a Zacks Rank #1.

The projected earnings growth rate (3-5 years) for NVIDIA and Mellanox are 10.25% and 15%, respectively.

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