1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Harsh Jain
Harsh Jain
Articles (219) 

Intel's Future Still Looks Bright

Intel is headed in the right direction to turn back to profitability

December 06, 2016 | About:

2015 was not a good year for Intel (NASDAQ:INTC). It was down approximately 6%, and this year also the stock is in red. However, this does not mean that growth is over for the company. After missing revenue estimates in the first and second quarter of 2016, the company reported healthy third-quarter results.

The company had EPS of 80 cents, exceeding analyst estimates by 8 cents. On the other hand, the company’s revenue came in at $15.78 billion, $200 million more than consensus estimates and representing a jump of 9.1% year over year.

As a matter of fact, the company’s profitability in non-volatile business plunged so suddenly this year mainly due to the decline in NAND flash prices all over the industry. Furthermore, the company is facing start-up costs, as it ramped up production in its memory factory in China, which adversely impacted its profitability.

Not only that, the company is also making substantial investments in its forthcoming memory technology, “3D XPoint.” However, it anticipates that its new memory technology will help it to counter all the losses and secure a robust position in that space.

Furthermore, the company also has plans to escalate investments in its data center, connectivity business, IoT technology, and surging client divisions like gaming. In the most recent quarter, the company detailed that the outlay on research and development escalated 5% year over year.

Moving onward, it is well-known that automotive sector is growing at a rapid rate, and Intel recently announced that it has plans to invest over $250 million throughout the next two years to produce autonomous vehicle technology, comprising 5G connectivity, vision processing, security as well as cloud computing.

In an effort to grasp a strong position in the automotive industry, the company recently partnered up with BMW and Mobileye to create a self-driving system for the iNext BMW, which is expected to play a major role in the automaker’s prospect.

Moreover, the company has also done approximately $1 billion of wide-ranging business with significant auto manufacturers like Infiniti, Lexus, Tesla. Keeping all this in mind, it looks like the company is just getting started and could certainly turn itself into a major player in the imminent years.

Summing up

After a disappointing performance in 2015, the company has finally displayed healthy progress this year. It abridged its headcount by 11 percent this year and has beat bottom-line estimates in the starting three quarters this year. The most significant thing to keep in mind is despite boosting its capital expenses, the company generated $10.5 billion of free cash flow in the prior four quarters.

Intel’s stock price is down roughly 1% year to date, which looks like a great opportunity for stockholders to get in.

Disclosure: No position in the stock in this article.

Rating: 0.0/5 (0 votes)


Please leave your comment:

Performances of the stocks mentioned by Harsh Jain

User Generated Screeners

pascal.van.garsseHigh FCF-M2
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)