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Why Intel (INTC) Stock Is a Strong Buy Right Now

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Shares of Intel (INTC - Free Report) have slowly climbed since the company reported solid quarterly earnings results in late July. The chip giant’s outlook also looks strong, and it might have recently become the sole cellular modem provider for all of Apple’s (AAPL - Free Report) upcoming iPhones.

Overview

Intel reported adjusted quarterly earnings of $1.04 per share, which not only topped our $0.99 per share Zacks Consensus Estimate it also marked impressive 44% year-over-year growth. The firm also saw its revenues pop 15% to $16.96 billion, just beating our estimate. Looking ahead, Intel raised its full-year revenue outlook to approximately $69.5 billion, up $2 billion from its April guidance. Plus, INTC raised its earnings guidance by $0.30 to $4.15 per share (+/- 5%).

Investors should also be pleased to note that Intel, which has supplied cellular modems for some of Apple’s iPhones for years, might be poised to take over that whole business. Fellow wireless-chip giant Qualcomm (QCOM - Free Report) said on the company’s recent earnings call that it will no longer be supplying modems into Apple's upcoming iPhones. This could mean that Intel will become Apple’s only iPhone modem provider.

Price Movement

Shares of INTC have climbed roughly 115% over the last five years. This trails its industry’s nearly 180% surge but does top the S&P 500’s 70% upward movement. Over the last two years, Intel stock is up 42%, which lags its industry’s 71% surge—driven by the likes of Micron (MU - Free Report) and Nvidia (NVDA - Free Report) . INTC stock is up just around 6% since the start of the year and currently sits well below its 52-week high of $57.60 per share.

 

Valuation

Moving on, INTC stock is currently trading at 11.7X forward 12-month Zacks Consensus EPS estimates, which marks a slight premium compared to its industry’s 11X but comes in well below the S&P’s 17.2X.

Intel has traded as high as 14.8X over the last year, with a one-year median of 13.6X. INTC stock is also currently trading just above its year-long low of 11.3X. Therefore, Intel stock looks rather attractive at its current level.

 

Growth Outlook

Our current Zacks Consensus Estimate is calling for Intel’s third-quarter revenues to hit $18.09 billion, which would mark a 12% climb from the year-ago period. The company’s full-year revenues are projected to jump nearly 11% to $69.47 billion.

INTC’s adjusted Q3 earnings are projected to climb by nearly 14% to reach $1.15 per share. Meanwhile, its full-year earnings are expected to reach $4.13 per share, representing over a 19% expansion.

Bottom Line

Intel has earned 14 third-quarter earnings estimate revisions over the last 30 days, with 100% agreement to the upside. INTC has also received 13 full-year and 13 fiscal 2019 upward earnings revisions during this same timeframe, against just two downward changes.

Intel is currently a Zacks Rank #1 (Strong Buy) and sports an “A” grade for Momentum and “Bs” for both Value and Growth in our Style Scores system.

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