Intel Corporation Pre-earnings Analysis
Chart done on daily timeframe. Expectations are low for Intel this earnings season after the company’s failure to grow its year over year revenue for two years in a row. Intel was once seen as unstoppable, but fierce competition and Apple’s decision to start making their own in-house chips hurt Intel’s revenues severely over the last 24 months. Their decline in growth is clearly reflected in their stock’s movement. Intel’s stock is flat year over year and despite its big downside move since 2021, their price to earnings valuation is still on the expensive side. INTC is trading at a P/E ratio of 89x, significantly higher than the healthy 15-25 average and even more expensive than big competitors in the space like Nvidia. There are two ways of bringing the P/E down to a more reasonable level, either INTC posts stronger profits, or the stock needs a further correction. Analysts expect profits to come in at a negative this quarter so if that’s the case then we INTC should face more downside to correct further.
It’s important to note that as we saw with Tesla earlier this week, the numbers alone aren’t enough to project what the stock will do. Sometimes companies will miss earnings and still move the other direction based on something stated on the earnings call. Intel is still a big threat in the semiconductor space and if they can excite investors about artificial intelligence projects then they have a a fighting chance.
Options chain analysis:
INTC’s option chain that expires on April 26th currently reflects an implied volatility reading of about 110%, which translates to about a $2.41 move from the underlying stock. Whether that’s up or down depends on the earning’s results.