Intel share price: Q2 earnings preview

We look at when Intel will report its Q2 earnings, the analyst consensus on the stock, and management’s own second quarter guidance.

When will Intel report its second quarter results?

Semiconductor giant Intel (INTC) is poised to report its Q2 results this Thursday, 23 July.

Intel share price: analysts remain subdued on the tech giant

Though Intel's stock fell sharply in March – alongside the rest of the US tech sector – the chipmaker has since seen its share price recover strongly, rising ~40% from those lows to last trade at US$61.15 per share.

Against this rally Wall Street has remain mixed on the stock, with the company commanding a Hold rating on average, according to MarketWatch. In saying that, Intel’s average analyst price target of US$64.82 per share – implies a shade of potential upside for traders and investors at current price levels – also according to MarketWatch.

At the time of writing Intel had a market capitalisation of over US$250 billion.

Intel Q1 results at a glance

Looking at Intel's first quarter results, the tech giant posted strong top and bottom-line growth, while flagging that it expected second quarter revenue and earnings to come in lower.

Specifically, Intel reported Q1 revenues of US$19.8 billion (+23%), against non-GAAP earnings per share (EPS) of US$1.45 (+63%) and impressive gross margins of 60.6%.

Like many companies in the current economic environment, Intel has worked to strengthen its balance sheet, cancelling its buyback program, while also enhancing its liquidity position through ~US$10 billion in new debt funding.

Speaking of the company’s latest quarterly results, Intel’s Chief Executive Officer, Bob Swan said:

‘Our first-quarter performance is a testament to our team's focus on safeguarding employees, supporting our supply chain partners and delivering for our customers during this unprecedented challenge.’

Looking forward, Mr Swan inspirationally said:

‘Guided by our cultural values, competitive advantages and financial strength, I am confident we will emerge from this situation an even stronger company.’

The company noted that it would not be providing full-year guidance due to the current economic uncertainty stemming from Covid-19.

Q2 guidance in focus

As part of the company's Q1 results, Intel’s management, on a non-GAAP basis, guided for the following Q2 figures, including:

  • Revenues of US$18.5 billion
  • An operating margin of 30%
  • Earnings per share (EPS) of US$1.10

Interestingly, the current analysts consensus stands a shade above that guidance – both in terms of GAAP and Non-GAAP measures – with analysts on average expecting Intel to report EPS of US$1.11 in the second quarter, according to MarketWatch.

In the broader scheme of things however, while Intel has seen its share price more than double in the last five years, the tech stock has traded on a consistently low earnings multiple, potentially reflecting investors’ subdued expectations around Intel’s growth prospects. Though this metric shot up during the late parts of 2017 and the early parts of 2018, it has since moderated to the low-teens, last sitting at 11.01x.

Indeed, competition in the chipmaking (semiconductor) space, has heated up in recent years, with the likes of Nvidia and Advanced Micro Devices (AMD) stealing CPU market share from the US$250 billion tech giant. For reference, in the last five years the AMD share price is up over a 3,000%.

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