Friday should be an interesting day for Intel (INTC) , which reported second-quarter earnings after Thursday's market close. Intel was my top stock pick for 2023.
The company exceeded consensus estimates on both the top (revenue of $12.9 billion vs. $12.14 billion consensus) and bottom lines (earnings per share of $0.13 vs. $0.03 loss), in what looked like a pretty good quarter.
In addition, Intel issued third-quarter guidance for revenue ($12.9 billion to $13.9 billion vs $13.3 billion consensus) and earnings ($0.20 versus $0.17 consensus).
It's been quite a ride for Intel shares the past several years.
While the stock is up about 33% year-to-date, it has done little over the past several years, and is currently trading at the same level as it did six years ago. The shares ran up to just over $68 in April 2021, pulled back to $25 last February, and closed Thursday at $34.55.
Back in February, the company, which had somewhat quietly become a dividend champion over the years, cut its quarterly dividend 66%, from 36.5 cents to 12.5 cents, the lowest level since 2007. Prior to the cut, Intel had raised the dividend at an 8.1% compound annual growth rate (CAGR) over the prior 15 years although that pace slowed over the past seven years to 6.2%.
At the time of the cut, INTC was yielding a whopping 5.7%. The markets did not seem to be too concerned as often is the case when a company reduces the dividend, and has welcomed the cut as a cost-cutting measure; since then, shares are up 36%.
INTC now yields 1.45%, but the company has stated that it intends to increase the dividend over time.
INTC ended its latest quarter with $24.3 billion in cash, and $49 billion in debt, and currently trades at 1.38x book value, and 2x tangible book value. Consensus estimates for 2024 ($1.74) and 2025 ($2.41) imply forward price/earnings ratios of about 20 and 14, respectively.
The shares were up about 7% in early Friday trading.
