Intel (INTC) to Report Q1 Earnings: What’s in the Cards?
Intel Corp INTC is set to report first-quarter 2018 results on Apr 26.
Notably, the company has a record of positive earnings surprises in the trailing four quarters, with an average beat of 14.81%. Last quarter, the company delivered a positive earnings surprise of 25.58%.
Last quarter, revenues totaled $17.05 billion, reflecting an increase of 4.1% year over year and 5.6% sequentially. The figure beat the Zacks Consensus Estimate of $16.31 billion. Notably, the company has beaten the consensus mark in three of the trailing four quarters.
Intel guided first-quarter 2018 revenues of around $15 billion (+/-$500 million), up 5% year over year excluding McAfee. The Zacks Consensus Estimate for revenues is currently pegged at $15.05 billion, reflecting year-over-year growth of 1.7%.
Moreover, the Zacks Consensus Estimate for first-quarter 2018 earnings is pegged at 71 cents per share, reflecting year-over-year growth of 7.6%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Intel’s focus on data center, cloud, self-driving car and Internet of Things (IoT) are key growth drivers for the first quarter. Management expects data-centric part of the business to grow in the mid-teens range, while PC centric to decline in low-single digits.
Apart from strong on-going demand for public clouds, the company is also expected to benefit from strength in on-premise and hybrid cloud build-outs.
The Zacks Consensus Estimate for Data Center Group (“DCG”) currently stands at $4.82 billion higher than $4.23 billion in the year-ago quarter.
Intel’s data center business and cloud have been registering strong growth in the last few quarters. The company has made significant advancement in this area as well and it is now offering more integrated solutions that are likely to be competitive on a cost per watt basis.
The company’s investments in field programmable gate array (FPGA) for acceleration (dramatically increases performances at very low power) and memory to reduce latency and increase speeds are helping it develop custom solutions for big players.
Moreover, Intel’s acquisition of MobilEye now enables it to offer almost anything related to self-driving vehicles — cameras, in-car networking, sensor-chips, roadway mapping, cloud software, machine learning and data management. The buyout enables the company rapidly penetrate the autonomous car technology market, currently dominated by the likes of NVIDIA.
Intel has also been a long-time supplier to Alphabet’s Waymo division. Further, its partnerships with BMW, Nissan, Volkswagen AG, and Ferrari will boost sales of processing chips, sensor-chips, cloud software and many more, are expected to drive top-line growth in the soon-to-be reported quarter.
What Our Model Says
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
Intel has a Zacks Rank #3 and an Earnings ESP of -1.21%, which indicates an unlikely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are few stocks you may consider as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.
Western Digital WDC has an Earnings ESP of +2.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Paycom Software PAYC has an Earnings ESP of +0.33% and a Zacks Rank #1.
Xilinx XLNX has an Earnings ESP of +5.26% and a Zacks Rank #2.
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